Kumul Petroleum Delays Stake Acquisition in Santos’ PNG LNG Project

Kumul Petroleum, the state-owned company in Papua New Guinea, has delayed its acquisition of a 5% stake in the PNG liquefied natural gas (LNG) project from Santos Ltd, citing the need to secure funding. The deal was supposed to be completed by December 2022, but the exclusivity period was extended to April 30 and has now been further delayed to the end of August. Santos remains committed to selling 5% equity in the PNG LNG project to support the PNG government’s equity objectives.

Santos CEO Kevin Gallagher expressed his support for the transaction and said the company would continue to work closely with Kumul during the extension period to help it finalize financing with third parties. “While the PNG project is a very valuable asset and Santos’ balance sheet is strong, Santos remains committed to selling five per cent equity in the project to support the PNG government to achieve the nation’s equity objectives,” Gallagher said in a statement.

PNG Prime Minister James Marape confirmed that private sector lenders have been lined up to provide funding for the acquisition. “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,” Marape said.

In September 2022, Santos received a $1.1 billion binding offer from Papua New Guinea’s state-owned Kumul Petroleum for a 5% stake in the PNG LNG project, the country’s biggest resources project. Santos’ acquisition of Oil Search in 2021 made it the largest shareholder in PNG LNG, considered one of the world’s lowest cost LNG producers. If the sale goes through, Santos will remain the top stakeholder with a 37.5% interest.

You may also like...