Sydney — The expansion plans for the Papua New Guinean LNG project advanced Thursday as PNG LNG participant Santos took an interest from, mostly, ExxonMobil in the P'nyang gas field, which is intended to help supply new capacity.
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The Australian company Santos signed a binding letter of intent to acquire a 14.3% stake in what is known as a petroleum retention licence 3. Santos' acquisition sees current participant ExxonMobil's stake drop from 48.99% to 36.86%, Oil Search's from 38.51% to 36.86% and JX Nippon's from 12.50% to 11.96%, Santos said.
"The arrangements we announce today mark an important step towards the proposed expansion at the PNG LNG plant via a 2.7 million mt/year third LNG train fed by existing project resources and P'nyang," Santos' managing director and CEO Kevin Gallagher said.
"We look forward to working with the PNG government, our partners and landowners to make expansion at PNG LNG a reality," he added.
Santos will pay $187 million in total, with about $120 million to be paid following a fully-termed sale and purchase agreement, which is expected around the end of June. The remainder is to be paid in installments subject to the award of a production development license to replace PRL 3 and a final investment decision for the construction of an additional LNG train at the PNG LNG site.
The execution of a sale and purchase agreement is subject to an agreement between the parties on entry into FEED for the PNG LNG expansion, Santos said.
Oil Search's managing director Peter Botten said: "Ensuring that the PRL 3 and PNG LNG Project ownership structure is broadly similar will facilitate the development of the 4.4 tcf P'nyang gas resources".
Santos' stake in PRL 3 will be at a similar level to its 13.5% interest in PNG LNG. Oil Search has a 29% stake in PNG LNG, ExxonMobil has a 33.2%, JX Nippon holds 4.7% and National Petroleum Company of PNG and Mineral Resources Development have the rest at 16.8% and 2.8%, respectively.
Along with the additional PNG LNG train, there is also a plan in place to add two 2.7 million mt/year capacity trains via the Papua LNG project.
Papua LNG signed an agreement with the PNG government in April. The government and landowners take a 22.5% equity in Papua LNG, while Oil Search holds 17.7%, Total has 31.1% and ExxonMobil 28.7%. Those two trains are to be supplied from the PRL 15 Elk-Antelope fields.
The PRL 3 participants are now waiting for a deal with the PNG government.
Oil Search has previously said it would follow shortly after the PRL 15 deal. Oil Search has previously said first LNG from Papua LNG is expected in 2024.
PNG LNG currently has the capacity to supply more than 8 million mt/year of LNG.
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