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Image courtesy of APEC 2013/ Flickr.

Papua New Guinea Prime Minister Peter O’Neill has been accused of improperly using a US$1.1 billion loan to buy shares for the government in Oil Search Limited.

Oil Search is the largest exploration and production company in Papua New Guinea (PNG).

O’Neill has been referred to a public prosecutor for the alleged misconduct, Radio Australia said Tuesday.

The Prime Minster said the issue is a case of “sour grapes” by former ministers.

O’Neill is also accused of improperly firing ex-Treasurer Don Polye for refusing to sign off on the loan from Swiss Bank UBS.

Since the purchase, the value of the Oil Search shares have risen by US$204.66 million.

Oil Search controls more than 60 percent of the oil and gas assets in PNG.

The company is a partner with ExxonMobil in its US$19 billion LNG project in Papua New Guinea and holds a 17.7 percent interest in France Total’s Elk-Antelope gas field.

The loan and share purchase are already the subject of a judicial review.

“Oil Search is by far the largest employer, investor and taxpayer in PNG…It is right and proper for the nation to invest in this company in the interests of the people,” O’Neill said.

Papua New Guinea is an independent island nation just north of Australia.