Oil Search Ltd., which has operations in Alaska and Papua New Guinea, has rejected a takeover bid by Australian independent Santos Ltd. that valued the combined entity at A$22 billion ($16.11 billion).

The deal would have given Santos a foothold in the Papua New Guinea liquefied natural gas (LNG) scene, considered some of the lowest-cost projects in the world. Oil Search is a partner in the ExxonMobil-operated PNG LNG project as well as the TotalEnergies SE-led Papua LNG development, which is expected to reach a final investment decision in 2023.

Santos would have also gained Oil Search’s operating stake in the Pikka Unit on the North Slope of Alaska, which contains the massive Nanushuk conventional oil play.

Santos revealed on Tuesday its offer had been rejected, the...