MELBOURNE, Oct 8 (Reuters) - Papua New Guinea Prime Minister James Marape has told Santos Ltd (STO) that the country wants an extra 10% stake in the prized PNG LNG project if Santos' proposed takeover of Oil Search goes ahead, the Australian newspaper reported on Friday.
Marape met with Santos CEO Kevin Gallagher and Oil Search CEO Peter Fredericson in Port Moresby on Wednesday to discuss the deal, which the government has said must meet the national interest.
If the deal goes ahead, Santos will become the biggest shareholder in PNG LNG, Papua New Guinea's biggest resources project, with a 42.5% stake in the gas project operated by Exxon Mobil Corp XOM.N .
Gallagher has said Santos would look to sell down part of its stake in PNG LNG to help align partner holdings in PNG LNG and another project set to be developed, TotalEnergie SE's TTEF.PA Papua LNG project.
"All things considered, the state would like to pick a portion of whatever Santos will make available in their rebalancing," PNG Petroleum Minister Kerenga Kua told the Australian.
"The Prime Minister is asking that the joint venture project partners should all agree for the state to be given the first right of refusal to acquire some portion of that equity," he said.
How cash-strapped PNG would pay for the stake is unclear. Citing unnamed sources, the newspaper said the PNG government would expect to acquire the stake for a low price or potentially via a loan.
Shareholders in Oil Search are due to vote on the deal on Nov. 29, which will require support from 75% of the votes cast.
