The Oil Search Limited (ASX: OSH) share price is climbing higher in early trade after a positive update on its Papua LNG project in Papua New Guinea (PNG).
What did Oil Search announce this morning?
Oil Search Managing Director Peter Botten this morning provided a response to a recent PNG update on the company's Papua LNG Project.
Mr Botten said:
We are encouraged by the statement made by the Minister for Petroleum, Mr. Kerenga Kua, that the PNG Cabinet (National Executive Council) has agreed, in principle, to stand behind the Papua LNG Gas Agreement, which was signed by the PNG Government and the PRL 15 Joint Venture in April 2019.
On Sunday 4 August, the PNG Minister for Petroleum said that while it should stand behind the signed agreement, "the State reserved its rights to discuss a shortlist of matters to be discussed with the developers."
Positively for Oil Search, the PNG government said, "what we have discussed and agreed to are favourable and will not affect the general economics and fiscal terms of the Papua LNG Gas Agreement."
This wording is a positive step forward for Oil Search in its PNG operations, given the past few months of ongoing animosity between parties surrounding the agreement.
Oil Search said it is committed to supporting the operator of Papua LNG (Total SA) and the Government, in resolving any final questions on Papua LNG Gas Agreement.
The company said it is looking to finalise the P'nyang Gas Agreement and the PRL 15 and PNG LNG Joint Ventures can proceed into the Front-End Engineering and Design phase of the integrated three-train development in a timely manner.
Where to now for the Oil Search share price?
Following this morning's announcement, the Oil Search share price has climbed 3.24% higher at the time of writing to $7.16 per share.
As at the last close, the Oil Search share price was flat for the year at $6.94 per share, but I'd expect the positive sentiment coming out of the PNG negotiations could fuel a share price rebound for the Aussie oil company throughout the rest of the week.
