Australia’s Oil Search Ltd agreed a $2.2 billion deal to acquire InterOil Corp, aiming to pave the way for two rival liquefied natural gas projects led by global majors to work together in Papua New Guinea.

In the face of weak oil prices, PNG is considered one of the best locations for LNG projects, thanks to its high quality gas and low costs. The country has the existing PNG LNG project, run by ExxonMobil Corp, and the proposed Papua LNG project, run by Total.

For Total, which will boost its stake in Papua LNG as part of the deal, Oil Search’s move will open opportunities for collaboration and possible integration with ExxonMobil’s project, said CEO Patrick Pouyanné.

"It was a deal waiting to happen, a consolidation of the joint venture," said RBC analyst Ben Wilson. "Conceptually, it makes a lot of sense and should allow them to go forward to the development phase a lot faster than otherwise would be the case."

Oil Search co-owns Papua LNG and PNG LNG and has been pushing them to cooperate in order to avoid wasting money on duplicating infrastructure as happened on Australia’s east coast, where three LNG plants were built next to each other at a cost of $64 billion. The takeover of InterOil will give it a bigger stake in Total’s project.

"The days of industry profligacy are past with these sorts of oil and gas prices that we’re experiencing and are likely to experience for some years to come," Oil Search chief executive Peter Botten told Reuters.

ExxonMobil said it was "open to discussing infrastructure sharing opportunities with other operators where it is technically feasible and commercially attractive for both parties," in an email to Reuters.

InterOil is coveted for its stake in the Elk-Antelope fields, which could hold at least 6.2 trillion cubic feet of gas, more than enough to fill one LNG processing train. Drilling of one more well this year could prove it holds much more.

InterOil CEO Michael Hesson said the company had received a number of other proposals, but declined to give details.