High Arctic is running the project management for the construction of Oil Search's heli-portable drilling rig in China, along with commissioning and mobilisation to Papua New Guinea for an expected first spud date in the last quarter of 2008.

The initial contract period is for two years following its placement in PNG, with two successive one-year option terms.

As part of the contract, Oil Search and High Arctic will enter a lease agreement whereby the latter will lease the rig and take full management responsibility.

Once complete, Rig 104 is likely to assist Oil Search in its exploration focus following PNG LNG's recent gas agreement with the PNG Government.

High Arctic has previously won contracts for the management and operation of Oil Search's Rigs 101 and 103 as well as a contract for a hydraulic workover rig in March.

The total annualised revenue for the Oil Search contracts is around $US80 million.

The ExxonMobil-led consortium that will develop the PNG LNG project, which has entered the front-end engineering design phase, will source gas from the Hides, Angore and Juha fields, as well as associated gas from the operating Kutubu, Agogo, Gobe and Moran oil fields in the Southern Highlands and Western Provinces.

The gas will be treated at a plant at Hides before being piped to the liquefaction plant, expected to start production in 2013.

Oil Search has a 34.1% stake in the project, with ExxonMobil at 41.6%, Santos 17.7%, AGL Energy 3.6%, and Nippon Oil 1.8%. Landowner interests hold the remaining 1.2%.

AGL intends to sell its 3.6% stake by December, with joint venture partners holding some pre-emptive rights over this transaction.