Oil Search brings Total into Papua New Guinea for first time

Long-time Papua New Guinea explorer Oil Search Ltd. has farmed out a 50% interest in five of its Papua New Guinea exploration permits to France’s Total SA. It is the major’s first entry into the country.

The value of the deal has not been disclosed, but Total will reimburse Oil Search for past licence costs and provide a partial carry through an initial offshore drilling program in the Gulf of Papua as well as for the acquisition of seismic data in several onshore permits.

Further payments will be made if the exploration program is successful.

The deal includes as many as seven exploration and appraisal wells in the offshore permits and as many as eight wells onshore. Oil Search has retained the operatorship.

The deal is a culmination of a lengthy selection process which involved Oil Search looking at a number of international, LNG-capable independent oil and gas companies.

The drilling program of two definite wells and two options will begin offshore during first-quarter 2013.

Total says the deal is part of a strategy to strengthen the company’s presence in the region, particularly in gas and LNG.

Oil Search and Total have previously had a relationship, sharing exploration interests in the Middle East and an adjunct to the Papua New Guinea deal is an agreement for the two companies to form a strategic partnership to evaluate other licence prospects in the country—but excluding the highland region where Oil Search has a 29% of the Papua New Guinea-LNG project operated by ExxonMobil Corp.

Total says it is interested in carbonate plays and the most likely alliance with Oil Search will be Miocene-age carbonate prospects in the offshore Papuan Gulf where gas discoveries like Pandora and Pasca were made in the 1980s and onshore Gulf Province where Canadian company InterOil has had success with its Elk and Antelope gas discoveries.

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