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Oil Search in talks with British Gas on LNG plan

OIL Search Ltd has recently completed an initial evaluation of a liquefied natural gas (LNG) project, based on the Kutubu resource and backed by one or more other gas fields.
Managing director Peter Botten said in conjunction with British Gas, “commercial discussions are now taking place with BG to refine the potential project structure and terms of possible entry”.
He said: “It is recognised that there is considerable value in being a development leader for LNG in Papua New Guinea and, as a major resource owner, Oil Search is committed to being part of Papua New Guinea’s first development.
“The decisions that will be made this year on gas commercialisation are of key importance to Oil Search’s long term future.
“The relative merits of the various gas projects continue to be analysed, and around mid-2007, the company expects to be in a position to decide which gas project or projects are progressed further,” Mr Botten said.
He said the market is currently very competitive, with a number of credible developers wishing to secure a position in PNG’s large gas resource discovered lately and to lead the development agenda.
Earlier this month, Oil Search shelved its troubled A$8 billion PNG-to-Australia gas pipeline project, saying there are other potential projects in PNG that offer more value.
Mr Botten said yesterday while it was disappointing that activities had ceased on the PNG Gas Project, the alternative development options now represented an opportunity to deliver superior returns, and would add significant medium and long-term value and growth potential for both Oil Search and PNG.