BHP's Papua New Guinea gas, oil assets likely to go to Orogen
Sydney Morning Herald, December 1
By JANE COUNSEL
BHP is believed to be close to finalising the sale of its Papua New
Guinea oil and gas assets and investment group Orogen Minerals is
emerging as the likely buyer.
BHP is expected to conclude the sale, which it has yet to confirm is
on the market, within the next two to three weeks, now that it has
entered the final round of negotiations with several interested
parties remaining.
Santos, which is seeking to build its exposure in PNG, is
understood to have made the final round, along with Orogen, New
Zealand group Fletcher Challenge and Marubeni Corp of Japan.
The assets being sold include a 9.7 per cent interest in the Kutubu
oil and gasfield and the nearby Gobe oil and gasfield, and Kutubu's
associated exploration leases.
Analysts expect the assets will attract a price of between $250
million and $350 million, though there had also been the suggestion
that BHP may have been looking to gain greater value from the sale
by selling the oil and gas assets separately.
That option is considered unlikely, however, given the logistical
difficulty for the likely buyers and the lack of synergies that could
be achieved.
These assets are for sale as part of BHP's asset review, which has
led to the company disposing of more than $1billion in assets under
the guidance of new chief executive Mr Paul Anderson.
Orogen is a logical likely buyer, given the company's existing
holdings in the Kutubu and Gobe fields and its interest in the
Chevron-led PNG-to-Queensland gas pipeline.
Kutubu, which produces around 40,000 barrels of oil a day, and
the nearby Hides field are planned to supply the gas for the pipeline
project, and host substantial gas reserves.
By selling to Orogen, in which the PNG Government is the
controlling shareholder, BHP would be able to demonstrate it is
keen to maintain its good relationship with the PNG Government,
given the uncertain future of its Ok Tedi copper-gold mine.
Investors had speculated that a deal with Orogen on the oil and gas
assets could possibly have involved Orogen also purchasing BHP's
equity in Ok Tedi, but this is not considered likely now, given that
the World Bank review of the project is not expected to be
finalised until mid-next year.
Orogen is understood to have been keen to ensure it gained control
of the BHP oil and gas assets in PNG, although Santos was also
believed to have been a keen bidder, given that control of the
assets would present it with the opportunity to build its oil inventory
and to increase its presence in PNG, where it already has a 25 per
cent stake in the Hides gasfield.
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