Santos has signed a binding letter of intent to acquire a 14.3% interest in in Petroleum Retention License 3 (PRL 3), which contains the P’nyang natural gas field in Papua New Guinea, the company said in a news release May 16.
“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,” Santos Managing Director and CEO Kevin Gallagher said in the release.
The interest is a pre-government back-in, according to the release.
Participants in PRL 3 also include Exxon Mobil, which has a post-Santos farm-in interest of 36.86%; Oil Search (36.86%) and Merlin Petroleum Co. (11.96%).
Under the binding letter of intent, Santos will pay US$187 million in total, with about US$120 million payable following the execution of a fully-termed sale and purchase agreement, expected around the end of June, the company said in the release. The remainder in contingent installments is 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 plant site for the liquefaction of gas from the P’nyang Field, the release said.
Execution of a sale and purchase agreement is subject to agreement between the parties on entry into FEED for PNG LNG plant expansion.
The P’nyang Field has a certified gross 2C contingent resource about 4.4 trillion cubic feet1 (Tcf) of natural gas.
Santos has a 13.5% interest in the PNG LNG project, which has the capacity to produce more than eight million tonnes of LNG per annum, according to the release.