Oil Search signs deal with PNG on $18bn LNG project

Oil Search has signed an agreement with the Papua New Guinean government for the Papua LNG Project, enabling initial work to begin on the giant development.

The ASX-listed company said the deal would allow it, France-based Total and US-based ExxonMobil to start activities related to front-end engineering and design, including contractor selection.

ExxonMobil is the operator of the $US13 billion ($18.2 billion) Papua LNG project, but is not the majority stakeholder.

Total has the greatest interest in the project, with a 31.1 per cent stake, followed by Exxon with a 28.7 per cent holding, and Oil Search with a 17.7 per cent stake.

The government and landowners in Papua New Guinea have the remaining 22.5 per cent interest.

The same parties also own the PNG LNG project, which is in production.

Oil Search managing director Peter Botten said the agreement was a major milestone for the Papua LNG project.

“We believe the fiscal and other terms of the gas agreement equitably allocate project benefits and returns to the state, the project participants and other stakeholders,” he said.

Shares in Oil Search closed trade up 2.26 per cent at $8.15 each.