Oil Search (ASX:OSH) share price sliding amid fresh merger concerns

We take a look at what the PNG government has to say about the proposed merger with Santos.

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The Oil Search Ltd (ASX: OSH) share price is sliding, down 1.3% in afternoon trade to $3.93 per share.

This comes as news breaks that Papua New Guinea may yet derail the company’s proposed $21 billion merger with ASX energy heavyweight Santos Ltd (ASX: STO).

As the Australian Financial Review reports, PNG’s Prime Minister James Marape has said that any merger would have to be in his nation’s best interests.

A fly in the merger ointment

PNG-based Oil Search needs the agreement of the Marape Government for its merger with Santos to move forward.

According to Marape:

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

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.

In a sign that the PNG government could be manoeuvring for a better outcome for itself and the nation’s domestic oil and gas projects, Marape said, “I strongly recognise that the merger of these two important license players in the market can deliver higher capacity and value to our projects”.

Investors will be keeping a keen eye on the Oil Search share price as this plays out over the coming weeks.

Oil Search share price snapshot

The Oil Search share price has gained 28% over the past 12 months. This surpasses the 24% gains posted by the S&P/ASX 200 Index (ASX: XJO).

Year-to-date, the Oil Search share price has underperformed the benchmark, up 4.25% in 2021.

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