ExxonMobil has made a US$2.2 billion (£16.63 million) bid for InterOil and its interest in a gas field in Papua New Guinea, overpowering an offer from Australia’s Oil Search.
The supermajor thus gains a more favourable position against Total, which is supporting Oil Search’s bid to try and advance a gas project in Papua New Guinea.
“Oil Search’s Board and management are committed to acting in the best interests of shareholders at all times and are presently considering their position,” Oil Search Managing Director, Peter Botten, said in a statement.
Exxon and Total Compete for LNG Success
Total’s plans for a liquefied natural gas (LNG) project in Papua New Guinea and ExxonMobil’s PNG LNG project could mean the companies could either create tight competition or take advantage of the proximity of projects.
Oil Search owns a stake in both projects and had bit for InterOil in the hopes of tying the two projects together to help cut costs and accelerate the development of the new gas field.
InterOil Papua New Guinea Operations Map
“The proposal from ExxonMobil endorses Oil Search’s view on the quality of the Elk-Antelope gas fields and the value of the Papua LNG Project,” Botten added.
Potential Integration of LNG Projects
“Given its existing material interests in both the PNG LNG Project and in the Papua LNG Project, Oil Search is well placed to participate in the potentially very significant benefits that are expected to arise from cooperation between, and/or integration of, the projects,” Botten stated further.
Papua New Guinea is considered one of the best locations for LNG projects because of its high quality gas, the low costs involved and its proximity to potential customers in Asia.
If Oil Search wins the bid, Total will buy part of InterOil’s stake in the Elk-Antelope gas field, which would give it a 48% stake in the field that will feed its planned project.
As well as this, in this case, Oil Search will be entitled to receive a US$60 million (£45.36 million) break fee.
Oil Search now has until July 21 to submit a revised offer.