Santos Ltd., Adelaide, reported it intends to acquire a 14.3% interest (pre-government back-in) in petroleum retention licence PRL3 in the western highlands of Papua New Guinea. The licence contains P’nyang natural gas field.
The Santos interest has been acquired from the existing PRL3 participants and the company will pay a total of $187 million, $120 million of which will be payable following the execution of a fully termed agreement expected at the end of June. The remainder will be paid in contingent installments subject to the award of a production development licence to replace the PRL as well as a final investment decision for construction of an additional LNG train at the PNG-LNG plant site to treatment of gas from P’nyang field.
Most of the equity in PRL3 will come from operator ExxonMobil Corp. with Oil Search Ltd. and JX Nippon contributing smaller interests.
Oil Search said it would receive about $21.6 million for relinquishing a 1.65% stake in P’ntang to Santos bringing its holding back to 36.86%. ExxonMobil will hold a similar stake in the project after relinquishing about 12.1% to Santos. Nippon will relinquish 0.54% to Santos.
The deal will help smooth the path for development of P’nyang as an extension to the PNG LNG project in which Santos has a 13.5% interest.
Execution of this sale remains subject to agreement among the parties on entry to the front-end engineering and design phase for the PNG LNG plant extension.
P’nyang has certified 2C contingent resources of about 4.4 tcf of gas. The development plan is for a third train with a 2.7 million tonne/year capacity at the PNG LNG plant site at Caution Bay near Port Moresby fed by existing project resources and supplies from P’nyang.
Post Santos farm-in the interests in PRL3 will be ExxonMobil 36.86%, Oil Search 36.86%, JX Nippon 11.96%, and Santos 14.32%.
This arrangement is separate from the two 2.7 million-tpy trains also planned for the PNG LNG plant site fed by gas from the Total SA-operated Papua LNG project, which will tap the gas resources of Elk and Antelope fields in the eastern highlands.
