Santos sells stake in Papua New Guinea LNG facility

Papua New Guinea

PORT MORESBY, September 1, 2023 – Santos has signed a binding sale agreement with Kumul Petroleum Holdings for the initial sale of 2.6% participating interest in the PNG LNG project, the Australian energy player announced on Friday.

Kumul Petroleum Holding will pay USD 160 million for the acquisition in addition to around USD 160 million of project finance debt.

At the time of the announcement, the buyer had paid USD 80 million into escrow with Santos.

The deal requires approval of the Papua New Guinea regulator before December 31, 2023.

The agreement includes the option for the sale of an additional 2.4% stake in the project for USD 524 million in addition to a proportionate share of project finance debt.

The additional call option must be exercised before June 30, 2024 requires regulatory approval.

The USD 19-billion PNG LNG project began operations in 2014 and currently produces more than 8 million tonnes per year of LNG.

Prior to the sale, Santos held a 42.5% stake in the project alongside operator ExxonMobil with a 33.2% stake, Kumul Petroleum Holdings with a 16.8% stake, JX Nippon Oil with a 4% stake and local landowner Mineral Resource Development Company with the remaining 2.8% stake.

“I am pleased we’ve reached a binding agreement with Kumul on the sale of up to 5% of PNG LNG,” said Kevin Gallagher, managing director and CEO of Santos.

“This re-structured transaction is a pragmatic solution that provides a clear pathway to completion and builds our strategic alignment with Kumul and our long friendship with PNG, where Santos has been a committed corporate citizen for over 40 years.”