Australia's Oil Search says encouraged by PNG 'in principle' support for Papua LNG deal

[BENGALURU] Australia's Oil Search said on Monday it was encouraged by a signal from Papua New Guinea's new government that it would back a major gas agreement, even though the government still wanted to renegotiate some terms.

Papua New Guinea's Petroleum Minister Kerenga Kua on Sunday said his government "in principle" stood behind the agreement, having said last month that the deal with French oil major Total SA could be redrawn.

Papua LNG, which also includes Exxon Mobil Corp and Oil Search, is part of a US$13 billion project set to double the country's exports of LNG.

"Oil Search is committed to supporting the operator of Papua LNG (Total SA) and the government, in resolving any final questions on Papua LNG Gas Agreement," Oil Search chief executive officer Peter Botten said in a statement.

Shares of the Australia-listed, but Papua New Guinea focused, company rose as much as 4 per cent on Monday to A$7.22 (S$6.76), compared with declines from most of its listed peers.

The deal was agreed in April but put up for review after the prime minister who signed it was ousted in a parliamentary vote in May, following a political crisis caused by discontent over the distribution of resource riches.

"The state has reserved its rights to discuss a shortlist of matters to be discussed with the developers," Mr Kua said in an e-mailed statement on Sunday.

"We believe that what we have discussed and agreed to are favourable and will not affect the general economics and fiscal terms of the Papua LNG Gas Agreement."

Mr Kua added that finalising the details should not take more than two weeks.

REUTERS