"The MENA (Middle East-North Africa) portfolio will be rationalised," the Sydney Morning Herald quoted Oil Search managing director Peter Botten as saying.

"There is strong competition for capital within our organisation ... A much more aggressive management of the portfolio is anticipated over the next few years."

Oil Search said assets to be divested were likely to include exploration and production license in Yemen and Egypt, the farm-down of frontier acreage in Tunisia and possibly assets in Libya.

The company added that the assets would be sold as packages to attract maximum interest and more than 40 companies had already expressed their interest.

About 20-24 companies would be selected for data room access.

Oil Search has appointed Harrison Lovegrove & Associates as its advisor for the divestment and expects to send out invitation letters to interested companies by the end of March.

The sales are expected to be effective from the middle of 2008 with estimated completion in the early fourth quarter.

Meanwhile, the company said that despite the tightening global credit markets, there was sufficient capacity to meet the PNG LNG project's total debt requirement of about $9.9 billion, of which its share is about $2.9 billion

Most of these funds are likely to come from export credit agreement loans, bank debt and debt capital markets.

Oil Search added it plans to maintain its oil production at around 40,000-50,000 barrels per day until 2011 to provide the cash flow it needs to help finance development of the liquefied natural gas project.

The company also spelled out its plan to build on the PNG LNG project, which it described as its first phase of growth from gas, with additional LNG trains or plans, petrochemicals supply, fertilisers and domestic gas opportunities in Papua New Guinea.