Australian independent Santos has agreed to sell a 2.6pc stake in the 6.9mn t/yr PNG LNG project to Papua New Guinea (PNG) state-owned firm Kumul, in a deal worth $576mn in cash and Kumul assuming $160mn of finance debt.
Santos has further agreed a call option to allow Kumul to acquire a further 2.4pc stake in PNG LNG for $524mn plus a "proportionate share of project finance debt." The call must be exercised by 30 June 2024, Santos said.
Kumul's stake in the project will rise to 19.4pc following the initial purchase, while Santos remains the largest shareholder with 39.9pc.
Santos had been expected to sell down its stake in the ExxonMobil-operated project by 5pc after a 2021 merger with fellow Australian independent oil and gas firm Oil Search, which increased its PNG LNG holding to 42.5pc from a previous 13.5pc. The exclusive agreement with Kumul was twice extended and set to expire on 31 August, with the new deal likely reflecting Kumul's difficulty in funding the total 5pc acquisition in one transaction.
Santos said on 23 August that PNG LNG produced 4.2mn t during January-June, 100,000t less the same period a year earlier, shipping 55 cargoes compared with 56 cargoes in the first half 2022.
The company said in February that it expects to maintain production at PNG LNG, despite a field decline at the Hides gas venture and development problems at its Angore backfill project where first gas is expected in 2024.
Santos has stakes in three LNG producing projects — the 3.7mn t/yr Darwin LNG and 7.8mn t/yr Gladstone LNG, both of which it operates, as well as PNG LNG.
It also holds a 22.8pc stake in the 5.3mn t/yr Papua LNG project, also in PNG and operated by TotalEnergies, which is presently in an initial engineering phase of development. The project's shareholders are targeting a final investment decision in early 2024.
