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    PNG to Retain Stake in Oil Search

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Summary

Papua New Guinea (PNG) has decided to raise A$1.68 billion ($1.48 billion) to pay off a bond it issued to Abu Dhabi in 2009 instead of giving up a strategic stake in oil and gas producer Oil Search, a source familiar with the decision told Reuters on Thursday.

by: Shardul

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Asia/Oceania

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PNG to Retain Stake in Oil Search

Papua New Guinea (PNG) has decided to raise A$1.68 billion ($1.48 billion) to pay off a bond it issued to Abu Dhabi in 2009 instead of giving up a strategic stake in oil and gas producer Oil Search, a source familiar with the decision told Reuters on Thursday.

The move could be the first step towards bringing Oil Search into play, with potential suitors now needing to court only the PNG government to gain a foothold in the A$11-billion company, adds Reuters.

Oil Search owns a 29 percent stake in the $19 billion PNG liquefied natural gas (LNG) project, which is expected to commence shipping gas in the second half of 2014.

The five-year bond, issued to Abu Dhabi's International Petroleum Investment Co (IPIC) at the height of the global financial crisis, was exchangeable for PNG's stake in Oil Search in March 2014 at a strike price of A$8.55 a share, reports Reuters.

PNG needed the A$1.68 billion in 2009 to foot its share of the development costs on the PNG LNG project, which is operated by ExxonMobil Corp. The government already owns a 16.8 percent direct stake in the $19 billion PNG LNG project, and may be a willing seller of its interest in Oil Search at the right price, adds Reuters.

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