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Oil Search disputes InterOil-Total deal in Papua New Guinea

BY JAMES PATON

PORT MORESBY (Bloomberg) -- Oil Search has been contesting Total' s agreement to acquire a stake in InterOil’s natural gas discoveries in the Pacific nation.

Oil Search,which agreed last month to purchase a stake in the same discoveries for an initial $900 mn,lodged a dispute with InterOil,Oil Search said in a statement,without detailing the basis of its complaint.

At stake are fields in Papua New Guinea that may underpin an expansion of the country’s LNG industry.Oil Search is already Exxon Mobil’s partner in a $19 bn LNG venture in the country that’s proceeding along with seven others in Australia to tap rising Asian demand.Total and InterOil want to develop a second LNG development.

InterOil will “defend its position strongly,”John Hurst,a spokesman in Sydney, said by phone.An e-mail to Total in Paris outside business hours wasn’t immediately returned.

Oil Search’s deal to buy 22.8 % of the InterOil fields from minority partners gave the company the right to preempt Total’s initial agreement in December,according to a JPMorgan Chase report last month.Total and InterOil revised their agreement on March 26, structuring the deal so that Oil Search couldn’t block the accord,according to a Citigroup report.

If Oil Search stopped Total,it could open the door for Exxon to enter the license and clear the way for the United States company to feed an expansion of its LNG project,Benjamin Wilson,a Sydney based JPMorgan analyst,wrote Feb 27.

Oil Search fell 0.7 % to $7.75 in Sydney trading, while the benchmark index rose 0.3 %.

Total,acquired 40.1 % of the Elk and Antelope fields,leaving InterOil with 35.5 %,the companies said.

03/28/2014

 

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