Bloomberg News

Oil Search Plans to Obtain Gulf of Papua Partner in Mid-2012

February 22, 2012

(Updates with comments from MD in third paragraph.)

Feb. 21 (Bloomberg) -- Oil Search Ltd., Papua New Guinea’s biggest oil producer, said it plans to obtain a partner in mid-2012 to help develop fields that may underpin its second liquefied natural gas development in the country.

Oil Search, partner in a $15.7 billion LNG venture in Papua New Guinea led by Exxon Mobil Corp., has found more than 30 prospects in the Gulf of Papua that may support another project, the Port Moresby-based company said in a presentation today after posting a 9 percent gain in full-year profit.

“We’re not an LNG operator,” Managing Director Peter Botten told reporters on a conference call. “To add credibility to the venture we’re in discussions with a number of highly credible, experienced LNG operators, who if they’re not in PNG, are certainly looking at PNG.”

Oil Search is starting the largest drilling program in its history and seeks to develop additional LNG processing units to export the fuel to Asia, the company said today. The Sydney- listed oil producer is planning to spend $2.2 billion in Papua New Guinea this year.

The company may have an initial view in late 2012 or early 2013 on whether it has enough gas to expand the Exxon-led venture, according to its earnings statement. Oil Search and its partners in that project may be able to make an investment decision on a third processing unit in late 2013 or early 2014, Botten said.

Oil Search has dropped 5 percent in the past year, compared with the 13 percent slump in the benchmark S&P/ASX 200 Index. The stock rose 2.1 percent to A$6.69 as of 3:34 p.m. local time.

Shell, Exxon

Royal Dutch Shell Plc, Europe’s largest oil company, is among energy producers that have talked to the company about a partnership in the Gulf of Papua, Oil Search said in August. Botten today identified Shell, Exxon and Talisman Energy Inc. as companies that may seek expansion opportunities in the country.

The Gulf resources may feed the LNG project already under development in Papua New Guinea or underpin a new venture, Botten said. The company said today it plans to drill at least two of the prospects in the area in the last quarter of 2012.

Exxon’s PNG development, scheduled to start exports in 2014, will take gas from fields in the Southern Highlands and Western provinces of the country by pipeline to a plant located about 20 kilometers (12 miles) northwest of Port Moresby.

--Editors: Ryan Woo, John Chacko

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.


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