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Oil Search a step closer to PNG expansion

Christian Edwards  |  21 Feb 2018Text size  Decrease  Increase  |  
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SYDNEY - [AAP] Oil Search (ASX: OSH) says it has progressed plans with global giants ExxonMobil and Total for new facilities that could double production of liquefied natural gas in Papua New Guinea.

The three companies have reached broad agreement on a preferred development concept, which is likely to include the construction of three new LNG processing plants, or trains, with a total capacity of eight million tonnes a year.

Two of these trains would process gas for the Papua LNG project, from fields controlled by French energy group Total, while the third train would be supplied gas from ExxonMobil's PNG LNG project and P'nyang fields.

Oil Search owns a 23 per cent stake in the Papua LNG project and the Elk-Antelope gas fields, and a 29 per cent interest in PNG LNG.

Oil Search managing director Peter Botten said the development concept facilitates each project's capacity and infrastructure.

It would also allow Oil Search to reach into the lucrative north Asian market.

"The market is hungry for another seller into north-east Asia," Mr Botten said.

The plans are to be presented to the PNG government and other joint venture partners, and if approved, a decision on the engineering and design phase is expected in the second half of 2018.

The announcement came as Oil Search delivered a net profit of $US302.1 million ($A381.9 million) for 2017, up from $US89.8 million in 2016.

The profit growth was driven by record levels of production, higher energy prices, and a significantly lower tax rate in PNG.

Oil Search expects production in 2018 to be similar to 2017 at between 28.5 and 305. million barrels of oil equivalent.

Operating costs are also forecast to be in line with 2017, while capital costs are expected to rise as activity on the company's growth projects ramps up.

Oil Search shares dropped 5.5 cents, or 0.7 per cent, to $7.535.

OIL SEARCH'S PROFIT BOOSTED BY STRONGER PRICES

* Full-year net profit $US302.1m, up from $US89.8m

* Revenue up 17pc to $US1.45bn

* Final dividend up 3 US cents to 5.5 US cents

 

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is an AAP journalist.

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© 2020 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

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