Santos gives more time for PNG-owned Kumul to complete LNG stake buy
Santos has said Kumul Holdings has paid enough money to increase its stake by 1.6 per cent, but did not reveal when the funds for the remaining equity will be paid.
Santos will grant Papua New Guinea’s national oil company more time to complete its acquisition of a 2.6 per cent stake in the Pacific Island’s LNG facility, a fresh delay in a sale that will stoke concern whether the full deal will materialise.
Santos said in December 2023 that Kumul had secured the funding for the US$736m ($1.12bn) deal for 2.6 per cent of the PNG LNG facility. Kumul has an option for a further 2.4 per cent. Santos said Kumul had paid US$250m as a down payment and the rest would be paid by January 31.
But stoking concern about PNG’s capacity to complete, Santos said Kumul has paid US$352m for about 1.6 per cent of PNG LNG and the rest would be paid in due time.
Santos did reveal when the payment would be paid.
Sources close to Santos insist the company remain confident that the remaining money will be delivered, but conceded some investors would worry amid a series of delays and alterations.
In May 2023, Kumul Petroleum delayed for a second time its deal with Santos to line up funding. The exclusivity period is now set to expire on August 31.
A revised deal was subsequently struck that would see Kumul buy 2.6 per cent and Wapu Sonk, managing director of Kumul Petroleum, told The Australian the deal would definitely materialise.
Mr Sonk, however, had raised the heightened difficulty in securing funding for hydrocarbon projects and issues associated with higher interest rates.
If Kumul can eventually secure the 5 per cent stake from Santos, it would own 22 per cent of PNG LNG, while Santos’ shareholding would fall to 37.5 per cent. It would remain the largest investor in the project.
The mooted sale was part of the arrangements agreed with PNG Prime Minister James Marape when Santos acquired Oil Search in 2021.
The acquisition of Kumul Petroleum’s additional 5 per cent stake is a key pillar in PNG’s ambition to boost the development of its resource sector for the benefit of the nation.
The plan is also underpinned by a second mooted LNG facility in PNG, the $US10bn Papua LNG project that the Pacific island country believes will have a transformative effect on its impoverished economy.
Kumul has acquired a 2 per cent stake in the development. Should the lead consortium of TotalEnergies, Santos and ExxonMobil progress to the final investment decision – Kumul as the PNG representative will own 22.5 per cent of the project.
The delay in selling down PNG LNG is also an inconvenience for Santos, which has ridden a wave of positive developments in recent weeks that has buoyed its standing with shareholders.
Shares in Santos fell nearly 1.5 per cent after the announcement, underperforming the wider market.
But shares in Santos remain more than 10 per cent higher than in late 2023 after a series of regulatory approvals and legal victories – creating some uncertainty about whether a deal with Woodside could be reached.
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