Santos scoops share in PNG gas with $271m acquisition

Santos is set to boost its presence in Papua New Guinea by acquiring the P’nyang natural gas field from the existing licence participants for $US187 million ($271 million).

The acquisition comes on the back off Santos’ binding letter of intent to secure a 14.3 per cent interest in petroleum retention licence 3 (PRL 3).

Included in the licence is the P’nyang gas field, which has a certified gross 2C contingent resource of around 4.4 trillion cubic feet of natural gas.

Santos, meanwhile, owns a 13.5 per cent interest in the PNG LNG project, which has the capacity to produce more than eight million tonnes of LNG a year.

“The arrangements … mark an important step towards the proposed expansion at the PNG LNG plant via a 2.7 million tonnes a year third LNG train fed by existing project resources and P’nyang,” Santos managing director Kevin Gallagher said.

“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.

“We look forward to working with the PNG Government, our partners and landowners to make expansion at PNG LNG a reality.”

The agreement is subject to an arrangement between the parties on entry into FEED for PNG LNG plant expansion.

ExxonMobil and Oil Search affiliates now hold an equal stake in the PRL 3 (36.86 per cent), with Merlin Petroleum Company owning the remaining of the interest (11.96 per cent).

Santos is expected to pay around $US120 million following the execution of the sale and purchase agreement in June 2019.

The remainder will be paid in instalments subject to the award of a production development licence to replace PRL 3 and an investment decision for the construction of an additional LNG train at the PNG LNG plant site.

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