UPDATE 1-Oil Search sees ample credit for PNG LNG project

(Adds strategy review details)

MELBOURNE, March 19 (Reuters) - Australian-listed oil and gas producer Oil Search Ltd (OSH.AX: Quote, Profile, Research) said on Wednesday it expects to put in up to $1.3 billion in equity and $2.9 billion in debt to help fund the development of a liquefied natural gas project in Papua New Guinea.

Announcing the results of a strategic review, the Papua New Guinea-based company said despite the global credit crunch, there was more than sufficient capacity to meet the project's total debt requirement of around $9.9 billion.

It also said it was looking to sell some assets in the Middle East to focus on other key assets.

Oil Search is a partner in an Exxon Mobil (XOM.N: Quote, Profile, Research) proposed LNG project in Papua New Guinea. It said last week partners in the project had reached a commercial agreement on sharing of the development costs.

The project now needs a gas agreement with the PNG government to clear the way for a final decision to go ahead with engineering and development for the project, possibly in April.

The proposed project will have a production capacity of 6.3 million tonnes a year. The venture partners are targetting to have first delivery by 2014.

Other partners in the project are Santos Ltd (STO.AX: Quote, Profile, Research), AGL Energy Ltd (AGK.AX: Quote, Profile, Research), Nippon Oil Corp (5001.T: Quote, Profile, Research) and PNG landowners.

Last month Oil Search reported a 32 percent decline in 2007 profit, its first fall in five years, due to higher exploration costs and tax rates.