Papua New Guinea's oil and gas company Oil Search has signed a deal to acquire all shares in InterOil in a transaction valued at around US$2.2 billion.
The assets of PNG-focussed InterOil include the large, undeveloped gas fields, Elk-Antelope, in the Gulf Province, the hub of what is expected to be the country's second major gas export project.
The merger is set to galvanise integration of this project with the ExxonMobil-led PNG LNG (Liquefied Natural Gas) Project which Oil Search already has a 29% interest in.
Following the acquisition, Oil Search announced it signed a memorandum of understanding with French major Total to sell down 60 percent of the interest acquired from InterOil to Total.
Total is the lead player in the project to develop the Elk-Antelope fields, which it said could create over 10,000 jobs in PNG.
Meanwhile, Oil Search's managing director Peter Botten indicated there could be capital spending savings of $US2-3 billion from developing the new gas project in co-operation with the existing project.
This was echoed by PNG's prime minister Peter O'Neill who saw co-operation between the two large LNG projects as being in the best interests of the country.
"This will carry an additional commitment from these companies to develop and commercialise this project in very timely manner, expediting the inflow of revenue," he said in a statement.
Both InterOil and Oil Search boards have unanimously approved the acquisition, and InterOil's board has unanimously recommended that InterOil shareholders vote to approve the transaction.