Santos has completed its sale of a 2.6% interest in the Papua New Guinea Liquefied Natural Gas (PNG LNG) project to Kumul Petroleum Holdings Limited (KPHL). The transaction, first announced on 29 December 2023 and detailed on 1 February 2024, was completed on 4 November 2024 and is worth US$602 million in cash (2.43 billion kina).
In addition, Kumul will assume approximately US$90 million (363 million kina) of existing project finance debt associated with the sale interest. Effective 4 November, Santos’ working interest in PNG LNG is 39.9 per cent.
Santos reaffirmed its 2024 market guidance, stating there is no change to it this year. Managing director Kevin Gallaher and KPHL managing director Wapu Sonk confirmed the equity sale on the same day.
Mr. Sonk also said that under its agreement with Santos, KPHL made a partial payment of US$352 million (1.42 billion kina) earlier this year, with the balance due by December 2024.
“We have just completed this share acquisition, well before the end of the year,” he added.
The acquisition increases KPHL’s stake in PNG LNG to 19.2%, including the 4.27% Kroton Equity Option shareholding, held for beneficiaries who are impacted provincial governments and landowner groups.
“Kumul Petroleum having an increased shareholding in the PNG LNG Project is clearly of great benefit to the company and the country,” Mr Sonk said. “The project will be fully depreciated by end of 2024 and project finance fully repaid by 2026, which means this additional equity is expected to provide high returns immediately and strengthen KPHL’s balance sheet.”
Mr Sonk said this increased equity will enable KPHL to expand its role in the country’s energy sector.
“For KPHL, the higher income from the PNG LNG Project means more ability for us to play a greater role in the country’s petroleum and energy sector as well as our ongoing support for nation-building development projects that will improve the lives of all Papua New Guineans,” he added.
In discussing KPHL’s future plans, Sonk said: “This acquisition positions the company to prepare to take up its mandated 22.5% equity in the forthcoming Papua LNG Project, whose FID is expected in late 2025, as well as other activities that the company continues to pursue.”
KPHL Finalises LNG Forward Sale with Chevron
On the same day, KPHL also completed a forward sale agreement with Chevron USA Inc. (Singapore Branch) to support KPHL's acquisition of additional equity in PNG LNG.
As part of the deal, Chevron will make an advance payment to KPHL in exchange for LNG and condensate cargoes over the next two years.
Sonk explained: “KPHL made a partial payment to Santos earlier this year with the balance to be paid by December 2024. Following an extensive bid process with major trading, utility and other entities to source funding, we selected Chevron’s forward sales agreement.”
This agreement follows KPHL's successful participation in the spot market, where it sold four LNG cargoes in 2024. Sonk emphasized the deal with Chevron will provide more security for KPHL as it continues to grow its energy portfolio.
“We appreciate Chevron being able to finalise this deal. This agreement advances PNG’s hydrocarbon business, where we believe there is significant potential in LNG and related energy businesses, including carbon offset possibilities. We look forward to working with Chevron in the future,” he said.
