August 20, 2019 / 2:44 AM / a month ago

Australia's Oil Search says spot LNG prices have no impact on PNG LNG contract arbitration

MELBOURNE, Aug 20 (Reuters) - Australia’s Oil Search Ltd said on Tuesday that current weak spot liquefied natural gas (LNG) prices would have no impact on any arbitration over a long-term contract between Japan’s Osaka Gas and the Papua New Guinea PNG LNG project, operated by Exxon Mobil Corp.

“The current market has no impact on the discussions,” said Ian Munro, Oil Search’s executive vice president for gas marketing told analysts at am earnings briefing on Tuesday.

He was asked to comment on what terms Osaka Gas was seeking to change in its long-term sale and purchase agreement (SPA) with PNG LNG, in which Oil Search is a partner.

Munro said each SPA with a customer is tailor-made, so it was hard to generalise how an arbitration might play out.

“An arbitration may or may not be able to rule on price. Any subsequent negotiations may or may not be retroactive,” Munro said. “It’s very much bespoke and it will certainly play out over the next few years.”

Exxon Mobil Corp and Osaka gas earlier this month declined to comment on arbitration earlier this month.

Reporting by Sonali Paul Editing by Kenneth Maxwell

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