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    Oz Santos Buys Stake in PNG P'nyang Field

Summary

Australian Santos has agreed to acquire a 14.32% interest in Petroleum Retention Licence 3 (PRL 3) in Papua New Guinea for US$187mn.

by: Shardul Sharma

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Oz Santos Buys Stake in PNG P'nyang Field

Australian Santos has agreed to acquire a 14.32% interest in Petroleum Retention Licence 3 (PRL 3) in Papua New Guinea for US$187mn, it said May 16. PPL3 contains the P'nyang natural gas field.

As per the binding letter of intent signed by Santos, it will buy the stake from existing PRL 3 participants – ExxonMobil (48.99%), Oil Search (38.51%) and Merlin Petroleum Company (12.5%). Post the deal, ExxonMobil and Oil Search will see their stakes drop to 36.86% each while Merlin’s ownership will reduce to 11.96%.

According to Santos, out of the US$187mn approximately US$120mn will be payable following the execution of a fully-termed sale and purchase agreement, expected around the end of June 2019, and the remainder in contingent instalments subject to the award of a production development licence to replace PRL 3 and a final investment decision for the construction of an additional LNG train at the PNG LNG plant site for the liquefaction of gas from the P'nyang field.

"The arrangements we announce today mark an important step towards the proposed expansion at the PNG LNG plant via a 2.7mn mt/yr third LNG train fed by existing project resources and P'nyang.

"We are very pleased to execute the letter of intent with the PRL 3 participants who are also affiliates of Santos' partners in the PNG LNG project," Santos CEO Kevin Gallagher said. Santos has a 13.5% interest in the PNG LNG project which has the capacity to produce more than 8mn mt/yr of LNG. 

The execution of a sale and purchase agreement remains subject to agreement between the parties on entry into Feed for PNG LNG plant expansion, Santos said.

Oil Search in a separate statement said that the signing of this letter of intent is an important step in creating alignment between the PNG LNG project and the PRL 3 joint venture, ahead of Feed entry for the planned three train expansion at the PNG LNG plant site. Two of the proposed new trains will be underpinned by gas from the Elk-Antelope fields and one train by gas from the PNG LNG project and the P’nyang field, Oil Search said.

“We are pleased to have signed this agreement, which represents another milestone towards the development of additional LNG capacity in PNG. Ensuring that the PRL 3 and PNG LNG project ownership structure is broadly similar will facilitate the development of the 4.4 trillion ft3 P’nyang gas resource," Oil Search managing director, Peter Botten, said.