Santos Ltd has received a US$1.1 billion binding offer from Papua New Guinea’s state-owned Kumul Petroleum for a five stake in PNG liquefied natural gas (PNG LNG) project, the country’s biggest resources project.
Australia’s Santos became the largest shareholder in PNG LNG with its takeover of Oil Search last year and even with this sale will remain the biggest stakeholder in a project considered one of the world’s lowest cost LNG producers.
If the deal goes ahead, Kumul’s stake in PNG LNG will increase to 22.8 percent, which the company’s managing director, Wapu Sonk, said would “bring huge economic and social benefits to the nation”.
“This is a massive investment for us, costing approximately US$1.1 billion,” Sonk said in a statement.
He was not available on Tuesday to comment on how Kumul will pay for the stake.
PNG has sought more control over its oil, gas and mineral resources since Prime Minister James Marape took power in 2019. He returned as the country’s prime minister in August this year after a national election, vowing to “get more from our resources” without scaring away investors.
Kumul’s offer is conditional on obtaining waivers of pre-emptive rights from the other partners in the project, which are Exxon Mobil Corp (XOM.N), the operator with a 33.2 percent stake, a unit of Japan’s JX Holdings Inc and PNG state-owned Mineral Resources Development Co.
Exxon and JX Nippon Oil & Gas Exploration were not immediately available to comment.
Santos said it had agreed to deal exclusively with Kumul until December 31 regarding the stake sale in PNG LNG.
If the sale goes through, Santos will end up holding 37.5 percent of the project.
Santos said in August it expected to reap proceeds from the sale of a five percent stake in PNG LNG “in line with market consensus valuation”, which was around US$1.5 billion.
The company had aimed to raise up to US$3 billion from asset sales this year but failed to find a buyer for its stake in the Pikka oil project in Alaska and deferred selling a stake in the Dorado oil and gas project off Western Australia while it revises development plans.
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