Santos Increases Stake in Papua LNG Project
Synopsis
Santos boosts its stake in the Papua LNG project, with ExxonMobil set to take over as operator as the project nears a final investment decision.
Key Highlights
- Santos has agreed to buy a further 3.3% interest in the Papua LNG project from TotalEnergies two months after announcing it was taking a near-61% stake for US$1.6 billion (A$2.4 billion).
- Santos’ stake in the project is projected to increase from 17.7 per cent to 21 per cent after taking into account the PNG Government’s proposed back-in.
- ExxonMobil will become the operator of Papua LNG from TotalEnergies with its own stake raised to 34.1%.
- The agreement is subject to regulatory approvals and a final investment decision, which is expected in Q4’2026.
Santos Extends Its Papua LNG Position
Santos offered to pay approximately US$189 million (approximately $262 million) for a further 3.3% interest in the Papua LNG project from French firm TotalEnergies SE Santos estimates that its net interest in the project will increase from 17.7 percent to 21 percent when account is taken of the planned back-in by the Papua New Guinea Government.
The agreement is subject to regulatory approvals and the project making a final investment decision, currently expected for Q4 2026. Santos anticipates that its share of LNG production from Papua LNG will jump approximately 19% to around 1.2 million tonnes a year if the deal goes ahead as planned.
Changing Leadership at a Project Level
The transfers are part of wider changes that will see ExxonMobil replace TotalEnergies as operator of Papua LNG and raise its interest in the project to 34.1%. Santos, who has said having ExxonMobil operate both Papua LNG and the existing PNG LNG project could lead to greater operational efficiencies and better implementation of the projects.
According to Santos CEO Kevin Gallagher, the deal bolsters Santos upon a project which he believes is part of a new chapter in its development path alongside Barossa and its Alaskan Pikka developments.
Gas Policy Remains in Focus
Santos is also facing gas policy again this week with the Papua LNG deal. Australia Pacific LNG has urged the Federal Government to prevent exporters from buying domestic gas to meet export obligations under a proposed gas reservation scheme.
ACLNG chief executiveDan Clark said a 20 per cent reservation target could deter investment in new supply, too. Santos has expressed similar concerns, saying sending too much gas into the domestic market would keep prices low in the short term but reduce the attractiveness of new gas projects in future.
Debate will continue tomorrow, with Santos CEO Kevin Gallagher set to speak at the National Press Club.
Source: Mootley fools
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
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