PNG Sees Value in Santos, Oil Search Merger

Prime Minister James Marape of Papua New Guinea (PNG) has acknowledged the logic underpinning a potential merger between Oil Search and Santos (LNGI Aug.2'21). “I strongly recognize that the merger of these two important license players in the market can deliver higher capacity and value to our projects. It brings a stronger combined balance sheet to the table. I also recognize that this proposed merger is a strong positive statement in terms of investor confidence in the operating environment,” Marape said in a statement. But because Oil Search activities constitute a significant part of PNG’s gross domestic product and provide jobs to thousands of PNG nationals, “any proposed merger must satisfy the national interest test,” Marape said. Marape added that his government’s top priority is to ensure that projects such as Papua LNG, Pasca A, and Pn’yang are progressed as soon as possible. Papua LNG is a proposed two-train LNG plant expected to be sanctioned by operator TotalEnergies in 2023. P'nyang is expected to feed Exxon Mobil’s PNG LNG plant. Twinza Holdup Pasca A is PNG’s first offshore field. It is expected to be developed by Australian minnow Twinza in two phases with a focus on extracting condensate and LPG for the domestic market before looking at LNG exports. A gas agreement was slated to be signed in late July, which would have cleared the way for Twinza to enter into front-end engineering and design phase (LNGI Jul.15'21). However, the signature did not take place and Twinza has yet to receive any formal communication on the way forward, the company said in a recent statement in which it expressed concern due to “the lack of any apparent progress.”