Papua New Guinea’s national petroleum company, Kumul Petroleum Holdings Limited (Kumul Petroleum) announced yesterday that it had made a binding conditional offer to Santos Limited (Santos) to acquire an additional 5% shareholding in the PNG LNG Project. Kumul Petroleum would also assume 5% of the PNG LNG Project debt corresponding with that additional equity. Wapu Sonk, Managing Director of Kumul Petroleum, said, “We have made an offer to purchase another 5% equity in the PNG LNG Project, subject to a number of formalities. This is a massive investment for us, costing approximately US$1.1 billion.” “To secure this offer, open for acceptance until 31 December 2022, we have made a part payment of US$55 million to Santos, and these funds will be held by Santos until the transaction is finalised. This is a very worthwhile investment for Kumul Petroleum; the additional project equity will ensure a boost in our annual cash flow and significantly raise national ownership in the project.” Mr Sonk outlined that following the Kumul Petroleum Board and NEC approval, Kumul Petroleum has been negotiating with Santos to acquire this equity in the PNG LNG Project following the Oil Search:Santos merger in 2021. Mr Sonk continued, “the offer to Santos is irrevocable, Santos will deal exclusively with Kumul, and its progression will require the waiver of certain pre-emptive rights by other PNG LNG Project participants, and will require all necessary regulatory approvals to be complied with.” “The transaction will strengthen alignment for the future development of PNG’s natural gas resources,including undeveloped resources which may at a future point utilise the existing PNG LNG Project infrastructure. We also look forward to progressing a Heads of Agreement with Santos to enable us to work together to advance Kumul’s intentions to become a net-zero regional operator.” After the equity acquisition the PNG State’s participation in the PNG LNG Project would increase to approximately 22 per cent and Santos would retain a 37.5% interest. “The economic development of PNG’s natural gas resources will underpin national development for decades to come, and increasing national content and enhancing the strong cash flows to Kumul Petroleum and other stakeholders will bring huge economic and social benefits to the nation,” Mr Sonk concluded.