Oil Search Says PNG LNG Project Has Major Asian Customer

The Exxon Mobil-led PNG LNG liquefied natural gas joint venture in Papua New Guinea has reached agreement on the key terms of an agreement with an unnamed Asian customer, project participant Oil Search Ltd. (OSH.AU) said Tuesday.

Oil Search, which also reported an expected fall in first quarter production and revenue on a lower oil price, said the "major Asian customer" has agreed to buy two million tons of LNG each year from the project.

The agreement is awaiting government regulatory approval, Oil Search said.

Significant progress has been made with other customers and it's expected that additional heads of agreement will be signed "in the near term", Oil Search said in a statement.

Oil Search produced 1.9 barrels of oil equivalent in the three months to March 31, down from 2.2 million on-year. It stuck to its annual guidance of producing 8.0-8.3 million BOE in 2009.

First quarter operating revenue fell sharply to US$71.4 million, from US$172.5 million on-year due to a large fall in the price of crude oil.

By Ross Kelly, Dow Jones Newswires; 61-2-8235-2957; ross.kelly@dowjones.com

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