SYDNEY, Sept. 10 (UPI) — While there’s no immediate risk, Fitch Ratings said there may be marginal issues if Australia’s Woodside Petroleum acquires rival Oil Search Ltd.
Woodside made a non-binding offer Tuesday for Oil Search to tap deeper into the Papua New Guinea gas market.
Woodside is Australia’s largest oil and gas company, serving as the operator of the giant Pluto liquefied natural gas project in the country. Oil Search, meanwhile, has a strong position of its own in the liquefied natural gas market.
The Asian Development Bank estimates Pacific economies will grow by an average rate of 9.9 percent this year, with Papua New Guinea helping to boost short-term overall growth with LNG.
Fitch Ratings said from its offices in Sydney there was no immediate risk to Woodside’s BBB+ rating from the offer.
If the deal moves forward, Woodside would benefit from the 29 percent stake in an LNG facility in Papua New Guinea held by Oil Search.
“Fitch notes that the PNG LNG facility is an attractive cost-competitive LNG production facility,” it said. “The transaction, however, would increase Woodside’s exposure to increased geopolitical risks.”
The deal for Oil Search would be valued at around $8.1 billion and comes at a time when most energy companies are spending less to conserve capital in the weak oil economy. Oil Search expressed caution about making hasty reactions to the deal.
Fitch said the initial response from Oil Search was to consider the deal.
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