Agreement to see Horizon Oil sell off PNG assets

 HORIZON Oil has entered into an agreement to sell 40 per cent of its Papua New Guinea assets to Osaka Gas Niugini Pty Ltd, a subsidiary of Osaka Gas Co. Ltd of Japan.

With the grant of the petroleum development licence over the Stanley field in Western, the transaction completed last June resulted in US$54 million (K145m) in cash being transferred to Horizon Oil.

This is in consideration for the transfer of 40 per cent of Horizon Oil’s interests in PDL 10 (formerly PRL 4) (Stanley field), PRL 21 (Elevala and Ketu fields) and PPL 259 with an additional US$24m (K64m) in past costs also paid on completion. 

The remaining US$130m (K350m) of the sale price will be payable to Horizon Oil upon final investment decision for an LNG project plus potential production payments where threshold condensate production is exceeded.

The sale marked the beginning of a 60/40 strategic alliance between Horizon Oil and Osaka Gas, a leading global gas company and one of Japan’s largest utility companies and LNG importers. 

The principle objective of the partnership is to commercialise Horizon Oil’s and Osaka Gas’ net of 135 million barrels of oil equivalent certified reserves and contingent resources and develop extensive acreage in Western   for the purposes of supporting a mid-scale LNG project. 

The companies intend to exploit the full potential of the assets via early condensate production, local gas sales and LPG sales and to market their respective shares of petroleum products, especially LNG, on a combined basis. Osaka Gas’ experience as a participant in LNG projects, its LNG engineering capability and its role as a large scale offtaker, transporter and distributor of LNG all add credibility to the venture.

Recently, Horizon Oil’s chief company representative Kelvin Bramley said the Sydney-based   remains on target to commercialise its gas resources in the Western.