Kumul Petroleum Holdings Limited (KPHL) has outlined how it will fund the State’s 22.5% equity participation in the Papua LNG Project under the US$1.1 billion (about K4.4 billion) funding plan approved by the National Executive Council (NEC Decision No. 235/2026 ). The plan combines domestic bank borrowing with cash flow from KPHL’s existing interest in the PNG LNG Project, and requires no direct allocation from the National Budget.
KPHL Chairman Ambassador Isaac Lupari said it was important to distinguish KPHL’s equity funding obligation from the financing of the Papua LNG Project as a whole.
“The US$1.1 billion covers the State’s equity commitment. It is not the total cost of Papua LNG. The rest of the project’s funding will be arranged at project level, through project finance lenders and the joint venture partners, and repaid from project revenues,” Chairman Lupari said.
“Domestic lenders will provide US$300 million through a syndicated loan arranged by BSP Financial Group Limited (BSP). The remaining US$800 million will come from cash flow generated by KPHL’s interest in the PNG LNG Project during the Papua LNG construction period.
“We will draw on these funds progressively as our share of project costs, known as cash calls, falls due. The US$800 million will be generated over the construction period – it is not held in cash today. Drawing funds only as they are needed avoids borrowing the full amount upfront and paying interest on money not yet required, which lowers the cost to the State.
“We have already set aside US$180 million for our first cash call following the Final Investment Decision (FID), as part of the US$1.1 billion package,” he said.
“The BSP facility is a KPHL-level facility. It carries no State guarantee and has been structured consistent with the State’s existing international obligations. The terms of any security over KPHL’s assets or cash flows will be set by the agreed financing documents,” he said.
KPHL will continue to contribute to Government revenue through dividends, taxes and other corporate contributions. During the Papua LNG construction period, dividends will be balanced against KPHL’s project funding commitments, debt service and the need to maintain the company’s financial strength. They will be determined each year by the KPHL Board, in consultation with the Trustee, in line with operating performance and available cash flow.
Chairman Lupari said the project’s benefits would flow to the economy in stages. “During construction, project spending will support jobs for Papua New Guineans and payments to local suppliers and contractors, creating business opportunities and supporting household incomes.
“Once production begins, LNG exports will earn foreign exchange, the State will receive taxes, royalties and other agreed project benefits, and KPHL’s equity will provide long-term investment returns for the State.
“These benefits will build over time. Their value and timing will depend on the project reaching FID, successful construction, production performance, LNG prices, costs and debt repayments.
“This is the first time the State’s participation in a resource project of this scale is being funded entirely from domestic sources: financing from domestic lenders combined with KPHL’s own PNG LNG Project cash flow,” Chairman Lupari said.
Chairman Lupari thanked the Prime Minister, Hon. James Marape, MP, and the National Executive Council for their support. He also acknowledged the Minister for Petroleum and Energy, Hon. Jimmy Maladina, MP, the Trustee Delegate, Hon. William Duma, MP, and the Treasurer, Hon. Ian Ling-Stuckey, MP.
“Our responsibility is to turn petroleum ownership into sustainable value for Papua New Guineans. That requires clear financing, careful cash flow management and strong governance throughout the investment cycle,” he said.
Papua LNG depends on the confidence of international partners and lenders. KPHL welcomes public discussion of the project and will continue to provide accurate, timely information to support it.
