In a presentation last week, Oil Search managing director Peter Botten said his company has a pre-emptive right to match any offers for AGL's 3.6% stake in the project, which could cost $US549.92 million (K1.5 billion) according to Merrill Lynch.
However, Oil Search needs at least $US4 billion to finance its 34.1% share of the $US13 billion PNG LNG Project while its market capitalisation is little greater than that figure at $US4.62 billion.
AGL has proposed the sale of its PNG assets to focus on its core business of power generation in Australia.
AGL managing director Michael Fraser told the Australian Associated Press earlier this month that the LNG project was too much of a departure from what it was when AGL originally became involved, a project to pipe gas from PNG to Australia.
In 2006 Oil Search sold a 10% stake of the LNG project to AGL for a total acquisition cost of around $US427 million, including interests in gas and oil reserves, production and processing infrastructure.
AGL flagged the sale of GasValpo, a Chilean gas distribution business, to a consortium of Australian superannuation funds for $US90 million this week.
