PM Marape says Government is closely monitoring a proposed acquisition of Oil Search Limited

Prime Minister Hon. James Marape, MP says the PNG Government is fully aware of the Santos Limited (ASX code “STO”) and Oil Search Limited (PNGX code “OSH”) proposed merger as announced on 21 July 2021 and is closely monitoring it.

Prime Minister Marape said his Government has also noted the recent board and management changes at the Oil Search Limited.

“Oil Search Limited is a prominent PNG company whose activities comprise a significant percentage of PNG’s GDP and provides the livelihood to thousands of Papua New Guineans both directly and indirectly. Any proposed merger must satisfy the national interest test.”

The Prime Minister further stated that his Government’s top priority is to ensure that projects such as Papua LNG, Pasca A and Pn’yang are progressed as soon as possible.

He said it is in this context that the Government is keen to see how the merger talks go with Oil Search and Santos adding that he could see some positive developments from this deal.

“I strongly recognise that the merger of these two important license players in the market can deliver higher capacity and value to our projects. It brings a stronger combined balance sheet to the table. I also recognise that this proposed merger is a strong positive statement in terms of investor confidence in the operating environment.”

He said PNG welcomes the fast-tracking or prioritising of any upstream oil and gas development and downstream LNG export investment in PNG, whether by capital raising and investment or as a direct consequence of a merger or an acquisition. This can only result in demonstrable long-term benefits to PNG including:

  • Rapid development of PNG’s significant world-class proven reserves.
  • Prioritising of PNG projects including integration where-ever possible.
  • Employment and industry training of PNG citizens/residents.
  • Emergence of PNG as a regional energy supplier with best environmental, social and governance (ESG) principles being adhered to by operators.

Prime Minister Marape said while any business mergers or takeovers is determined by the parties themselves and their commercial interests he emphasized on the importance of having meaningful capacity and participation through an extensive and senior management level in-country corporate office and leadership thrust.

"It is important that the merged entity ensures significant local influence on decisions affecting Papua New Guinea assets, jobs and broader community.

"We do not wish for the largest oil and gas company operating in our country to simply be a branch office of a foreign company. It is important that while maintaining a strictly commercial focus, the interests of all employees, contractors and service providers are given the highest priority," he said.

The Prime Minister also noted the given fact that Oil Search is dual listed in Papua New Guinea and Australia, that all takeover regulatory requirements are strictly observed at this time.

It is the Prime Minister's expectation that the Securities Commission of Papua New Guinea is fully informed of this takeover and that includes ensuring that detailed and appropriate disclosures are maintained in the process for the regulator to do its job well.