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Razon, a Filipino entrepreneur, will buy the majority of a South China Sea gas field

Image: Reuters Berita 24 English - Enrique Razon, the Philippines' ports and gaming billionaire, is buying a majority share in a South C...

Image: Reuters

Berita 24 English - Enrique Razon, the Philippines' ports and gaming billionaire, is buying a majority share in a South China Sea gas field from a close ally of outgoing President Rodrigo Duterte, a move that is expected to boost his Reed Bank oil exploration franchise.

In a statement released on Thursday, Razon's Prime Infra Holdings Inc said it will buy a controlling stake in the Malampaya gas-to-power project from Dennis Uy's Udenna Corp for an unknown sum, the latest in a spate of business mergers by the Philippines' second richest man.

Razon's proposal was initially uncovered by Reuters in May, when it was revealed that Uy, whose corporate empire grew quickly under Duterte, was looking to sell assets worth several billion dollars, including the Malampaya gas field, in order to pay off debt.

For over $1 billion, Uy bought a 90 percent stake in the Malampaya gas field from Chevron and Shell.

Prime Infra did not specify how much of the company it was purchasing. The Philippines' Department of Energy (DOE) and state-owned Philippine National Oil Co-Exploration Corp (PNOC-EC), which owns 10% of Malampaya, must both approve the agreement. Requests for comment from both agencies went unanswered.

Udenna declined to provide any specifics regarding the agreement, but Uy added in the same statement that he was looking forward to working with Razon to keep Malampaya running and satisfy the critical demand for energy security.

According to an analyst and a banker, the deal benefits both Razon and Uy.

"Debt reduction is a must for Uy in this rising interest rate environment, hence the asset sale," Carlos Temporal, research analyst with AP Securities in Manila, told Reuters.

The controlling interest, according to Temporal, will give Razon control over Malampaya's processing plant and pipeline, boosting the feasibility of his oil and gas exploration license in the Reed Bank, which the DOE earlier estimated had larger natural gas reserves than Malampaya.

The offshore gas field of Malampaya is located in Palawan province, in a region of the South China Sea that Beijing does not claim. It is used to fuel power plants that provide around a fifth of the Philippines' electricity.

Uy's Udenna suggested in December that Malampaya might continue to function for several years after the project's projected completion date of 2027.

According to Forbes, Razon has a net worth of $6.7 billion. He is "an expert in surviving in highly regulated enterprises," according to a banker who was not authorized to speak to the media.

Bloomberry, a casino-resort company, International Container Terminal Services, and Manila Water are among the 62-year-biggest old's interests.

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