- Energy giant Santos (STO) faces a fresh delay over the sale of 5 per cent of its interest in the PNG LNG project to Kumul
- It marks the second time the company has had to extend the exclusivity period with Kumul for the deal, which now runs until the end of August
- The extension gives Kumul more time to line up funding, with Santos agreeing to help the state-owned company secure third-party financing
- STO Managing Director and CEO Kevin Gallagher says despite the delays, the PNG LNG project continues to represent compelling value for shareholders
- Shares in STO are up 2.4 per cent and trading at $7.24 at 3:45 pm AEST
Energy giant Santos (STO) has been hit with fresh delays over the sale of 5 per cent of its stake in the PNG LNG project to Kumul.
The Australian energy giant on Monday announced it had agreed to extend the exclusivity period for a second time to until the end of August, allowing more time for Kumul to line up funding.
Santos said it would work closely with Kumul to help secure third-party financing and added that there existed strong support from both the government and its joint venture partners regarding the transaction.
Papua New Guinea Prime Minister James Marape said he was fully supportive of continuing the transaction between Santos and Kumul.
“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,” the Prime Minister said.
“With credible private sector lenders significantly advanced, I am confident that Kumul will secure an appropriate financing package.”
Santos Managing Director and CEO Kevin Gallagher said the PNG LNG project continued 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,” Mr Gallagher said.
“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.
“While the PNG project is a very valuable asset and Santos’ balance sheet is strong, Santos remains committed to selling 5 per cent equity in the project to support the PNG government to achieve the nation’s equity objectives.”
In September 2022, Santos received a US$1.1 billion (A$1.6 billion) binding offer from Papua New Guinea’s state-owned Kumul Petroleum for the 5 per cent stake in the PNG LNG project.
Santos will remain the top stakeholder in the project if the transaction goes through, holding a 37.5 per cent stake.
Shares in STO were up 2.4 per cent and trading at $7.24 at 3:45 pm AEST.