March 18, 2020 / 12:04 AM / 21 days ago

UPDATE 1-Oil Search slashes spending to cope with oil price crash

(Adds details on LNG expansion in Papua New Guinea)

March 18 (Reuters) - Oil Search Ltd has frozen all activity in Papua New Guinea other than maintaining current production and has put on hold early development work on its Alaskan oil project to cope with crashing oil prices.

The Papua New Guinea-based oil explorer on Wednesday slashed expected capital and investment spending in 2020 as oil prices plunge below $30 a barrel and the coronavirus epidemic raises fears about global demand.

“At present, we have assumed that activities on LNG expansion are minimal,” Oil Search said, referring to the $13 billion liquefied natural gas expansion in Papua New Guinea, led by Exxon Mobil Corp and Total SA.

Oil major Exxon, the operator of PNG LNG, one of the projects key to the expansion, also told Oil Search it was cutting discretionary spending.

Investment spending by Oil Search is expected to be down 38% in 2020 to between $440 million and $530 million, and capital spending down about 44% to between $200 million and $300 million.

“While Oil Search is fortunate to have world-class assets, these unprecedented times require us to take immediate and decisive steps to position us for a potentially extended period of lower oil prices and business uncertainty,” Oil Search Managing Director Keiran Wulff said in a statement.

The Australia-listed explorer also suspended plans to sell a 15% stake in its Alaskan assets, although it said discussions with several parties are continuing. (Reporting by Nikhil Kurian Nainan in Bengaluru and Sonali Paul in Melbourne; Editing by Tom Hogue and Stephen Coates)

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