PNG to use its Oil Search stake for LNG project funding

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Nov. 7 -- Papua New Guinea Public Enterprise Minister Arthur Somare has confirmed that the state-owned resources company Independent Public Business Corp. (IPBC) will use its 17.56% equity in Oil Search Ltd. to raise funds to maintain its forthcoming 19.4% stake in the ExxonMobil Corp.-operated Papua New Guinea LNG project (OGJ Online, Oct. 21, 2008).

The funds will come from the Abu Dhabi government-owned International Petroleum Investment Corp., based in the UAE.

IPBC recently became the Papua New Guinea state nominee for the government's stake in Papua New Guinea LNG against competition from rival state resources company Petromin (OGJ Online, Oct. 30, 2008). It is now clear that IPBC won the nomination by securing $1 billion in financing from the UAE corporation, one of the world's largest sovereign funds.

The deal has not been finalized but it reportedly has the IPIC fund claiming 17.56% of Oil Search shares at $8.55 (Aus.) any time within 5 years of agreement finalization. IPBC currently owns about 196.6 million Oil Search shares; at $8.55/share the value is about $1.68 billion.

Somare, who is the son of Prime Minister Michael Somare, said this week that both ExxonMobil and Papua New Guinea's financial adviser Goldman Sachs agree that the deal is a good one and that shares that opinion.