It said $120 million will be payable after the exestuation of a fully termed sale and purchase agreement expected at the end of next month.
The rest will be in contingent instalments subject to the award of a production development license from the government to replace the PRL and final investment decision for an additional train at the PNG LNG project, which it already has a 13.5% interest in.
The PRL3 partners post-Santos acquisition are Oil Search (36.86%), ExxonMobil (36.86%), JX Nippon (11.96%) and Santos which takes a 14.32% share pre-government back in.
The execution of an SPA is still subject to agreement between the parties on front end engineering and development entry for the planned plant expansion.
Recent political upheavals in the nation have been blamed, in part, on disagreements over the development of LNG projects, with multiple high-level MPs leaving Prime Minister Peter O'Neill's party and pointing to a possible vote of no confidence soon.
However the ructions have seemingly not delayed the Santos deal, which Oil Search managing director Peter Botten suggested could be close during a March earnings call.
P'nyang has a certified gross 2C contingent resource of approximately 4.4 trillion cubic feet with 620 billion cubic feet to Santos pre-government back in.
"The arrangements we announce today mark an important step towards the proposed expansion at the PNG LNG plant via a 2.7 million tonne per annum third LNG train fed by existing Project resources and P'nyang," CEO and managing director Kevin Gallagher said this morning.
Oil Search called it an "important step in alignment" between the PNG LNG project and the PRL3 joint venture.
It is part of a wider three train expansion at PNG LNG with two trains' gas to come from the Total-operated Elk-Antelope fields, which will serve the French company's two train Papua LNG expansion, which in April finalised arrangements with the government.
Oil Search managing director Peter Botten said the LOI represented another milestone to the development of additional LNG capacity in PNG.
"Ensuring that the PRL3 and PNG LNG project ownership structure is broadly similar will facilitate the development of the 4.4Tcf P'nyang gas resource," he said, noting capital investment could be minister via using existing PNG LNG infrastructure and operating costs materially reduced over its 30-year lifespan.