UPDATE 1-Oil Search: No need to raise cash for LNG project

* No plans to raise cash to fund LNG project

* Has $460 mln in cash and $406 mln in undrawn facility

* Says in strong position to meet equity requirements (Adds details, background)

PERTH, May 12 (Reuters) - Australian-listed oil and gas producer Oil Search Ltd (OSH.AX) has no need to raise cash to fund its share of cost in a proposed liquefied natural gas (LNG) project in Papua New Guinea, the firm said on Tuesday.

Oil Search said it was responding to inaccurate market speculation about its funding plans after partner Santos Ltd (STO.AX) said on Monday it was looking to raise up to A$3 billion to help fund the project. [ID:nSYD452766]

"Oil Search is unrated and does not have any requirement or desire to dilute its shareholders by raising cash to effectively cover proposed debt," it said in a statement to the stock exchange.

"In fact, it would be illogical for Oil Search to do this. If the company raised cash to cover debt, it would simply not borrow the money in the first place and save itself the substantial financing costs."

Oil Search has a 34 percent stake in Exxon Mobil's (XOM.N) proposed 6.3 million tonnes a year LNG gas export project in Papua New Guinea. The project, estimated to cost $11-12.5 billion and is targetting first delivery by 2014.

The Port-Moresby based Oil Search said it expects future equity requirements at year end to be about $1.2 billion, subject to final capital costs and expenditures.

With over $460 million in cash and an undrawn facility of $406 million as of April 30, the firm said it is in a strong position to meet its equity requirements from existing funds and future cash flows.

Shares in Oil Search closed 0.38 percent higher at A$5.24 on Tuesday, compared with a 0.7 percent decline in the broader S&P/ASX 200 Energy index .AXEJ. (Reporting by Fayen Wong)