Papua New Guinea’s state-owned petroleum company, Kumul Petroleum, is currently in advanced discussions with Chinese banks to secure funding for its stakes in two major liquefied natural gas (LNG) projects in the country.
According to the company’s managing director, Wapu Sonk, talks with Chinese banks have progressed further compared to those with banks in the US, Europe, and Australia, as they have fewer concerns about fossil fuel development.
“Most of the funding discussions are really with Chinese-backed banks because they have a different view on ESG,” he said, referring to environmental, social, and governance issues.
“It’s progressed to a point where it is mature,” Sonk noted at a Papua New Guinea resources and energy conference in Sydney.
Notably, the Bank of China, ICBC, and Bank of Communications were among those involved, he said.
The state-owned venture needs to raise approximately $1.34 billion to acquire the remaining 5% stake in the PNG LNG project from Santos and fund a 22.5% share of the Papua LNG project, which is expected to be approved next year.
The resource-rich but impoverished South Pacific nation is seeking to boost foreign investment and trade amid a power struggle between the United States and China in the region. However, Papua New Guinea’s Prime Minister James Marape clarified that there have been no recent discussions with China regarding security, as the country recently signed a security agreement with neighboring Australia.
Australian banks have been hesitant to finance the PNG LNG project due to its reliance on fossil fuels. However, Sonk believes that the inclusion of carbon capture technology in the Papua LNG project could make it more attractive to Australian banks. He also mentioned that Kumul is currently in talks with ANZ Group and Export Finance Australia.
The Papua LNG project, with a capacity of 5.4 million tons per year (mtpa), is a joint venture between TotalEnergies, ExxonMobil, Santos, and Kumul Petroleum.
In September, Kumul Petroleum acquired a 2.6% stake in PNG LNG from Santos for $736 million, with an option for an additional 2.4% stake that expires in the middle of next year. Sonk expressed confidence that Kumul would meet the deadline and secure funding to participate in the Papua LNG project when a final investment decision is made in 2024.
Petroleum Minister Kerenga Kua also stated that there should be flexibility for the country if it misses the deadline next year. With the potential for significant economic benefits, Papua New Guinea is determined to move forward with its LNG projects and attract foreign investment, despite the ongoing power struggle between major global players.
