“The financing memorandum for the project was released to potential lenders and the initial feedback from them demonstrates a strong interest in providing highly competitive funding for this project,” managing director Peter Botten said.
“Oil Search is seeking to raise approximately $US750 million in debt, in relation to its share of the PNG Gas Project costs.”
Oil Search also managed to buck the recent trend of upwardly revised capital cost estimates, stating that capital expenditure for the project is expected to remain around $2.5 billion, subject to final upstream facilities configuration.
A number of gas sales agreements (GSA) matured during the quarter, and marketing activities to convert other indicative terms agreements to GSAs were continuing.
“The signing of these GSAs is expected to take place prior to the project sanction decision, which is now scheduled to take place before the end of the year,” the company said.
Meanwhile, the drawn-out negotiations with Australian oil and gas major Santos regarding its entry into the project through its interest in the Hides gas field, were said to be continuing.
Design optimisation and capacity expansion studies were completed as part of front end engineering and design work during the quarter, with the initial capacity of the project pegged around 250 petajoules per annum with the option of future expansion.
Oil Search said detailed talks with the AGL/Petronas pipeline consortium – responsible for the PNG-Queensland gas pipeline – regarding the terms of the gas transportation agreement also took place during the quarter.
Discussions were said to revolve around optimising the pipeline network in Australia and managing the cost pressures of the construction phase.
Talks with the Gas Project operator ExxonMobil regarding the integration of Exxon’s operatorship of the project and Oil Search’s operatorship of the PNG oil fields are expected to be wrapped up during the current quarter.
