Kumul makes move to buy PNG LNG stake from Santos

Australian LNG producer Santos said it had received a binding offer from Papua New Guinea’s national oil and gas company Kumul Petroleum to buy a 5 percent stake in the PNG LNG project.

The deal has an asset value of $1.4 billion, including a proportionate share of project finance debt of about $0.3 billion, Santos said in a statement on Tuesday.

Santos said in its first-half result report it was in “advanced discussions” with shortlisted counterparties for the sale of a five percent interest in the PNG LNG project.

The company currently has a 42.5 percent stake in the 6.9 mtpa LNG export plant in Caution Bay following the Oil Search merger, while Kumul has a 16.8 percent stake.

ExxonMobil holds a 33.2 percent operating interest in PNG LNG.

Conditional offer

To secure the offer, Kumul has paid an amount of $55 million to Santos which “will be held in escrow to be released to Santos as a deposit for part payment of the offer price if it accepts the offer,” the Australian firm said.

The offer is conditional on Kumul obtaining the waivers of certain pre-emptive rights by each other PNG LNG project participant under the project operating agreement to allow the transaction to proceed, it said.

Santos said the offer would remain open for acceptance until December 31, 2022.

The firm has agreed to deal exclusively with Kumul during this period regarding the sale of equity in PNG LNG.

The proposed transaction will have an effective date of December 31, 2022 with Santos to retain all 2022 cash flows.

Completion remains subject to customary conditions including necessary regulatory approvals and Kumul securing financing.

Low-cost asset

The potential sale would increase the equity interest of PNG to about 22 percent “supporting the PNG government objectives for the people of PNG to have a greater equity interest in the development of their natural resources,” Santos said.

As part of the proposed transaction, Santos and Kumul will negotiate a heads of agreement to further collaborate on the development of Kumul’s regional capacity and capability, including carbon emission reduction opportunities to achieve net-zero operations.

Santos CEO Kevin Gallagher said the potential sale of a 5 percent interest in PNG LNG to Kumul represents an opportunity to build strategic alignment for the future development of PNG’s natural gas resources, including via PNG LNG infrastructure.

“PNG LNG is a low-cost and low emissions intensity asset that contributes strong cash flows to the project participants and economic and social benefits to the nation,” Gallagher said.

Most Popular

Another FSRU arrives in Egypt

The 160,000-cbm FSRU Energos Eskimo has arrived in Egypt from Jordan, according to shipping data. The unit is one of four FSRUs that will serve a charter deal with Egypt's EGAS as the country seeks to meet its growing demand for natural gas.

Venture Global’s Plaquemines LNG to commission third jetty

US LNG exporter Venture Global LNG has received approval from the US FERC to introduce hazardous fluids to the third jetty at its Plaquemines LNG export plant in Louisiana.

MOL’s LNG carrier to feature SOFC tech

Japan's MOL and South Korea's Samsung Heavy Industries have received approval from classification society LR for the design of a 174,000-cbm LNG carrier integrating solid oxide fuel fell (SOFC) technology.

More News Like This

Santos: PNG LNG shipped 28 cargoes in Q1

The ExxonMobil-operated PNG LNG project in Papua New Guinea shipped 28 cargoes of liquefied natural gas in the first quarter of 2025, up by one cargo compared to the same quarter last year and one cargo less compared to the prior quarter, according to shareholder Australia’s Santos.

Santos: Barossa project 95.2 percent complete

The Barossa gas project, which will supply feed gas to the Santos-operated Darwin LNG plant, is 95.2 percent complete and remains on target for first production in the third quarter of 2025, Santos said on Thursday.

Santos says Barossa project 91 percent complete

The Barossa gas project, which will supply feed gas to the Santos-operated Darwin LNG plant, is 91 percent complete and remains on target for first production in the third quarter of 2025, Santos said on Wednesday.

TotalEnergies CEO says partners working hard on Papua LNG

TotalEnergies has a 37.55 percent operating stake in the Papua LNG project, ExxonMobil has 37.04 percent, Santos owns a...