The undersea field in the South China Sea has supplied a significant portion of the Philippines’ energy needs since 2002 but is set to run dry in a few years, Filipino officials earlier said.

“Today’s announcement is consistent with Shell’s efforts to shift our upstream portfolio to one that is focused on nine core positions,” Wael Sawan, Shell’s upstream director, said in a statement.

A subsidiary of the oil and shipping firm Udenna Corp is to pay US$380 million for Shell’s 45% operating interest in the gas field, plus up to US$80 million between 2022 and 2024 “contingent on asset performance and commodity prices”, the statement added.

The deal is expected to be completed by the end of the year.

The transaction brings Udenna’s total shareholding in the Malampaya field to 90% having earlier bought out the 45% stake of US oil giant Chevron in 2019.

A state-owned Philippine company holds the remaining 10%.