PNG’S OIL SEARCH LIQUIDATES MIDDLE EAST ASSETS

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PNG’S OIL SEARCH LIQUIDATES MIDDLE EAST ASSETS Needs to raise cash for liquid natural gas project

PORT MORESBY, Papua New Guinea (PNG Post-Courier, April 17, 2008) –Papua New Guinea major oil and gas company Oil Search Limited has sold its Middle East and North African (MENA) assets to raise funds for the PNG liquid natural gas project.

The company announced yesterday that it had sold a package of its Middle Eastern assets for $US200 million (K577.2 million) million) to focus on the development of a liquefied natural gas project led by US energy giant ExxonMobil.

[PIR editor’s note: Oil Search Ltd., based in Sydney, Australia but incorporated in Papua New Guinea, owns about 70 percent of PNG's oil reserves and over 50 percent of gas reserves dedicated to the PNG Gas Project. The PNG government holds a 17.6 percent stake in the company.]

The oil and gas producer, PNG’s largest, has sold eight assets across Egypt and Yemen to private outfit, Kuwait Energy Company KSC.

"The sale of these assets will provide cash and reduce near term capital requirements, freeing up funds to facilitate the delivery of Oil Search's share of the PNG LNG project," managing director Peter Botten said in a statement.

Oil Search shares added 28 cents (75 toea) or 5.87 per cent to $A5.05 (K13.53).

The sale is expected to be completed by mid year, with Oil Search remaining involved in the operations for a further three to six months to ensure the smooth transition of ownership.

Oil Search has retained a number of assets across its Middle Eastern portfolio in Yemen, Libya, Tunisia and Kurdistan.

"We believe that each of these licences has the potential to have substantial upside, the value of which can be better captured following further evaluation and de-risking," Mr Botten said.

Oil Search's primary focus is the development of an $US11 billion (K31.7 billion) LNG project in PNG with partners ExxonMobil, Santos Ltd, AGL Energy Ltd and Nippon Oil. The landowers are also partners in the project.

The project aims to commercialise a number of fields in the Southern Highlands and Western provinces of PNG, which will be treated and then piped to a storage facility 20 kilometres north-west of Port Moresby.

LNG will then be exported to Asian markets and Oil Search said initial discussions had taken place with potential customers in Thailand.

First LNG exports are expected by 2013.

The project partners last year scrapped the original concept of running a pipeline to transport gas from PNG to the east coast of Australia after it became uneconomical.

Oil Search Limited is an oil and gas exploration and development company that has been operating in Papua New Guinea since 1929.

The Independent State of Papua New Guinea through the Independent Public Business Corporation is a major shareholder with a 17.6 per cent interest in the company.

Papua New Guinea Post-Courier: www.postcourier.com.pg/

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