Oil Search completes placement for Elk-Antelope fields amid political dustup

Oil Search Ltd. has completed its share placement to the Papua New Guinea government in the recently announced deal to fund the company’s acquisition of a 22.835% stake in retention license PRL15 containing the Elk and Antelope fields in the eastern Highlands of Papua New Guinea for $900 million (OGJ Online, Feb. 27, 2014). The placement involved 149.39 million fully paid ordinary shares to the state, giving it a 10% interest in Oil Search.

The deal, which was completed last week, involved the acquisition of 100% of Pac LNG Group (formerly Pacific LNG), which is affiliated with the privately owned Swiss banking firm Clarion Finanz AG.

However the government’s involvement has sparked unrest in Papua New Guinea political circles with opposition leader Belden Namah calling on Prime Minister Peter O’Neill to resign, ostensibly because he has committed Papua New Guinea to a $700 million (Aus.) loan to fund its stake in Oil Search.

Flames were fanned this week when O’Neill sacked the leaders of two coalition partners—William Duma and Don Poyle—from their respective posts as petroleum minister and treasurer.

Rumors abound that the pair were sidelined because of their opposition to the further $700 million debt and the move to raise the country’s debt ceiling above 35% of gross domestic product.

O’Neill maintained they were causing instability and he himself has assumed the powers of treasurer.

Namah says the move is a blatant push to borrow more. He said the country’s debt had doubled to $2.4 billion from $1.2 billion while the debt-to-GDP ratio will rise to 37% from 35%.

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