Santos signed a binding letter of intent to acquire a 14.3% interest (pre-government back-in) in Petroleum Retention License 3 (PRL 3), which contains the P’nyang natural gas field in Papua New Guinea.
The PRL 3 participants plan to develop the P’nyang field in coordination with the participants in the PNG LNG Project to leverage the advantages of existing infrastructure.
Santos will pay $187 million in total, with approximately $120 million payable following the execution of a fully-termed sale and purchase agreement (SPA), expected around the end of June 2019, and the remainder in contingent installments 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 execution of an SPA remains subject to agreement between the parties on entry into FEED for the PNG LNG plant expansion.
The P’nyang field has a certified gross 2C contingent resource of approximately 4.4 Tcf of natural gas (approximately 0.62 Tcf net to Santos pre-government back-in).
Santos Managing Director and CEO Kevin Gallagher said Santos’ strategy in PNG is to work with its partners to align interests, and support and participate in backfill and expansion opportunities at PNG LNG.
“The arrangements we announce today mark an important step towards the proposed expansion at the PNG LNG plant via a 2.7-mtpa 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 has a 13.5% interest in the PNG LNG Project which has the capacity to produce more than 8 mtpa of LNG.
