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Oil Search said to be a Chinese takeover target

JAMES PATON
BLOOMBERG

OIL SEARCH, EXXON MOBIL’S PARTNER in the $15.7 billion natural gas project in Papua New Guinea, may attract a takeover bid, potentially from a Chinese buyer, the Royal Bank of Scotland says.

“We see a distinct possibility that a cashed-up Chinese major could take a swing at Oil Search,” said Philipp Kin, a Sydney- based RBS analyst. “PNG has vast potential for more gas and oil discoveries.”

Oil Search and Exxon should find sufficient reserves to underpin an expansion of their liquefied natural gas development, according to RBS. Oil Search also may sign a high-profile partner to develop fields in the Gulf of Papua region, Kin wrote.

Port Moresby-based Oil Search has started the largest drilling program in its history and is seeking supplies to support further LNG production units. The company is reviewing Gulf of Papua partnership offers, Oil Search said in April.

“Sovereign risk would probably be an impediment for any prospective buyer,” including a Chinese company, RBS said.

A spokeswoman for Oil Search in Sydney declined to comment on the RBS report.

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