Papua New Guinea’s very own Kumul Petroleum still has its sights on acquiring further equity in the ExxonMobil-operated PNG LNG project from largest shareholder Santos, again extending the deadline to complete the US$1.4 billion deal as it has yet to secure the necessary financing.
Kumul in late September submitted a binding conditional offer to acquire an additional 5% interest in the PNG LNG liquefied natural gas project from Santos, which holds the majority 42.5% stake.
The US$19 billion liquefaction project started operations in 2014 and today routinely produces in excess of 8 million tonnes per annum of LNG, significantly above its 6.9 million tpa nameplate design capacity.
PNG Prime Minister James Marape said: “I am fully supportive of continuing the transaction to purchase 5% of PNG LNG in pursuing PNG national interest and its nation building programmes.
“Given the volatility in the financial markets and high interest rate environment, I support Kumul’s request for a time extension to complete the transaction. With credible private sector lenders significantly advanced, I am confident that Kumul will secure an appropriate financing package.”
The $1.4 billion purchase price includes a proportionate share of the project finance debt of approximately $300 million. Kumul on 23 December extended the offer period until end-April, and Santos on Monday confirmed it has been advised the offer will now remain open until 31 August 2023.
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Santos added it has agreed to deal exclusively with Kumul during this period regarding the sale of equity in PNG LNG.
Kumul, for its part, has agreed it will work closely with Santos during this second extension period to assist it finalising its acquisition financing with third parties.
Kumul Petroleum managing director Wapu Sonk earlier told Upstream that the extra 5% equity would more closely align the state’s interest in PNG LNG with its back-in rights to future gas projects such as TotalEnergies’ Papua LNG and the P’nyang gas project.
Santos chief executive Keven Gallagher said that the tonnes per annum PNG LNG project continues to represent “compelling value” for shareholders.
“With the significant changes in the global energy landscape over the last 12 months, PNG LNG remains a world-class asset that is low-cost, low emissions intensity and delivers reliable LNG supply to our customers in Asia,” commented Gallagher.
“The project is positioned in a supportive regulatory environment, with fiscal stability arrangements in place ensuring that it contributes strong cash flows to project participants and delivers significant economic and social benefits to the nation.”
The partners’ current interests are operator ExxonMobil on 33.2%, Santos with 42.5%, Kumul having 16.8%, JX Nippon Oil on 4.7% and the PNG landowner Mineral Resource Development Company with 2.8%.
While describing the PNG LNG project is a very valuable asset, Santos said its balance sheet is strong and the company remains committed to selling that additional 5% equity to Kumul to support the host government in achieving the nation’s equity objectives.