Oil Search Bids for Talisman's Papua New Guinea Assets -- Update

By David Winning 

SYDNEY-- Oil Search Ltd. has bid more than $300 million to buy the Papua New Guinea assets of Talisman Energy Inc., in a move that could accelerate an expansion of the Pacific nation's flagship gas-export facility, people familiar with the matter said.

Oil Search hopes to add Talisman's natural-gas reserves in the flat western region of Papua New Guinea to its own P'nyang discovery in the densely forested highlands area. A deal could help Oil Search secure enough gas to justify a new pipeline and processing unit at the $19 billion PNG LNG export plant operated by Exxon Mobil Corp.

For Talisman, a deal would help it meet a goal of $2 billion in asset sales by mid-2015. Last month, the Calgary-based company grouped Papua New Guinea with the U.K. North Sea and Iraqi Kurdistan as assets where it was "actively pursuing exit or performance improvement."

"There are no viable offers that we are considering at the moment," Grant Christie, general manager of Talisman's Australasian unit, told The Wall Street Journal on the sidelines of a conference in Sydney. Oil Search Chief Executive Peter Botten declined to comment on the recent bid.

Papua New Guinea, a country better known for its jungles and tribal society, became the world's newest major energy exporter when the PNG LNG project shipped its first cargo to Asia in May. The project is one of several in the broader region including Australia which are expected to start up over the next three years and mark a shift in the global liquefied natural gas trade away from the Middle East.

Write to David Winning at [e-mail]

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