NOC’s enlargement of its share in ExxonMobil’s project enables Chevron to get more LNG

November 4, 2024, by Melisa Čavčić

Kumul Petroleum Holdings Limited (KPHL), the national oil company (NOC) of Papua New Guinea, has put the finishing touches in place to wrap up its acquisition of an additional stake in ExxonMobil’s liquefied natural gas (LNG) project located in Oceania.

Santos executed a binding sale agreement to sell Kumul a 2.6% participating interest in PNG LNG for a total purchase consideration comprising cash and the assumption of around $160 million of project finance debt. Earlier this year, the NOC paid $352 million to enable the partial completion of the transaction.

The company confirmed the completion of its acquisition of additional equity in the PNG LNG project from Santos on November 4. As a result, the firm’s shareholding increased to 19.2%, including the 4.27% Kroton equity option shareholding, held for beneficiaries impacted by provincial governments and landowner groups.

Wapu Sonk, KPHL’s Managing Director, explained: “Under our agreement with Santos we made a part payment of US$352 million earlier this year, with the balance to be paid by December 2024, and we have just completed this share acquisition, well before the end of the year.

”Kumul Petroleum having an increased shareholding in the PNG LNG Project is clearly of great benefit to the company and the country. The project will be fully depreciated by end of 2024 and project finance fully repaid by 2026, which means this additional equity is expected to provide high returns immediately and strengthen KPHL’s balance sheet.”

A deal with Chevron, under which the U.S. oil major agreed to make an advance payment, enabled the NOC to close the acquisition in exchange for LNG and condensate cargoes over the next two years. Since the introduction of equity marketing at the start of 2024, KPHL has confirmed the sale of 4 LNG cargoes on the spot market, with the term sale providing more security.

“We appreciate Chevron being able to finalise this deal. This agreement advances PNG’s hydrocarbon business, where we believe there is significant potential in LNG and related energy businesses, including carbon offset possibilities. We look forward to working with Chevron in the future,” underlined Sonk.

PNG LNG is an integrated development, commercializing the gas resources of Papua New Guinea and producing over 8 million tons of LNG each year which is exported to four major customers in the Asia region. ExxonMobil PNG Limited is the operator of the $19 billion project.

The production operations include gas production and processing facilities, onshore and offshore pipelines, and liquefaction facilities. The project start-up occurred in the middle of 2014. The liquefied natural gas is shipped to customers in Asia. More than 11 trillion cubic feet of LNG are anticipated to be produced over the life of the PNG LNG project.

KPHL’s Managing Director believes that the additional stake in the PNG LNG asset will enable it to get ready to take up its 22.5% equity in the forthcoming Papua LNG project, which is anticipated to get a final investment decision (FID)in late 2025.

The NOC recently picked Wison New Energies to work on Papua New Guinea’s first floating liquefied natural gas (FLNG) unit, which is planned to be deployed to the Gulf of Papua in Oceania to assist the Pacific island country in commercializing its offshore gas fields.