OIL Search Ltd’s first half profit for this year plunged 73.3%, or US$97.7 million (K268.4 million), to US$35.6 million (K97.8 million) from US$133.3 million (K366.2 million) during the same period last year.
In an announcement, the company said the fall in profits was driven by weaker world oil prices, stemming from the global slowdown, and lower oil sales.
OSL said its first half result was impacted by the steep fall in oil prices resulting from the global financial crisis.
“The average realised oil price in the first half was US$51.84 (K142.41) per barrel, 55% lower than in the corresponding period of 2008.”
On a brighter note, managing director Peter Botten stressed the LNG project remained on track for a final investment decision (FID) by year-end.
He said the first six months highlighted the major advances made by the PNG liquefied natural gas (LNG) project, with all targeted milestones achieved.
This included reaching alignment on commercial terms for LNG offtake with three LNG customers covering 4.3 million metric tonnes per annum (MTPA) with the balance of 2MMTPA awaiting final approval by the customer’s government, the signing of an umbrella Benefits Sharing Agreement (BSA) and a decision to begin early construction works.
Mr Botten said the company’s progress was also made on securing a project finance facility for the project, with a comprehensive term sheet negotiated with the Export Credit Agencies (ECA) during the period.
Oil Search was at an advanced stage of finalising the terms for the sale of an effective interest in petroleum Development licence 2 (PDL 2), including a 3.5% interest in the PNG LNG project, to International Petroleum Investment Corp (IPIC).