“We recognise the importance of a successful selldown of a 15 per cent interest in the Pikka development area and on securing project level financing to fund at least 50 per cent of the initial Phase 1 project costs,” Oil Search managing director Keiran Wulff said. Repsol is also expected to sell part of its interest but does not face the same balance sheet pressures as Oil Search, notes RBC Capital Markets analyst Gordon Ramsay.
Oil Search wants to sell a 15 per cent stake in the project this year to reduce its stake from 51 per cent, help with funding costs and reducing risks. The design of the venture was reworked last year to make it more economic, and to carry it out in phases, cutting capex by half. The commitment on engineering involves the first phase of the revamped project, which will be able to produce 80,000 barrels a day of oil. Oil Search will hunt for another partner to join its Pikka oil project in Alaska.Ī final go-ahead for construction is targeted for later this year after Oil Search finds a third partner to join it in the venture alongside existing 49 per cent partner, Repsol of Spain. The project was one of several major growth investments across the petroleum sector that were put on hold last year after the oil price crashed in March but have since been revived.Īfter work last year to revamp it, the project is now expected to break even at less than $US40 per barrel for Brent crude including a 10 per cent return. Oil Search has taken a major step towards construction of its first major project outside Papua New Guinea, committing to major engineering and design work on its $US3 billion ($3.8 billion) Pikka oil project in Alaska.
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