Under the deal, Kumul will buy the stake in PNG LNG, Australia's biggest resources project, for cash payment of $576 million and an additional $160 million of project finance debt, Santos said.
In a separate statement, Kumul said it has also been granted a call option to acquire a further 2.4% stake in the project for $524 million and a $145 million share of project debt, Santos said.
Shares of Santos, the country's No. 2 independent gas producer, rose 1.5% to A$7.79 in early trading.
In May, Santos had extended the exclusivity period for a $1.1 billion worth sale of its 5% stake in PNG LNG, considered one of the world's lowest cost LNG producers, till August-end.
Santos will retain a majority shareholding of 39.9%.