The statement, by proxy advisor ISS, comes as InterOil, which is the subject of a $US2.2 billion takeover offer by Oil Search, is itself ramping up its criticism of Mr Mulacek.

InterOil shareholders are to vote on June 14 on a proposal by Mr Mulacek to put several of his nominees on the board, which would see control in effect shift to him. As a result, the meeting is seen as signalling shareholder views towards the Oil Search offer.

Oil Search recently offered 8.05 of its shares for each share held in InterOil, along with a so-called "contingent value right", which will give InterOil shareholders access to any increase in oil and gas reserves of the Elk-Antelope field in Papua New Guinea that is to form the basis of a proposed new export gas project.

ISS said InterOil shareholders should reject each of the proposals put forward by Mr Mulacek, including his slate of proposed directors, since there is no "compelling case for change".

"The dissident has not made a compelling case for change, and a vote for all management nominees is warranted," the proxy advisory firm said in a report. "The dissident has not disclosed a detailed business plan that describes how the change in control of the company will be effected and the identification of a qualified and credible new management team."

Nor had Mr Mulacek put forward a proposal that was superior to the merger on the table from Oil Search.

Oil Search is already a shareholder in a gas export project in PNG, which is operated by Exxon Mobil, and by merging with InterOil, reckons this will help expedite plans for a second export gas venture, as well as bring with it significant cost savings that would improve overall project economics.

In presentations to be given to US investors this week, Oil Search estimated the new export project would be cashflow breakeven, that is cover its operating costs and interest payments, with the price of oil at $US19 a barrel. And if the price was above $US30 a barrel it would still breakeven after making repayments of the principal portion of any loans for the project as well as funding ongoing capital spending.

The merger would also avoid InterOil having to sell down its equity in the key PRL 15 acreage which contains the Elk-Antelope resource which will underpin the proposed new export venture, Oil Search said.

"Under Mr Mulacek, InterOil had no clearly articulated strategy and the projects he pursued conflicted with InterOil's agreement with the Papua New Guinea government," InterOil's board claimed in a recent letter sent to its shareholders.

"In fact, as a result of these projects, the PNG government commenced action against InterOil to terminate the agreement and InterOil's licence over the Elk-Antelope field. Moreover, Mr Mulacek was unable to execute a transaction to monetise" group assets.

For his part, Mr Mulacek argues that since he quit the InterOil board, its share price has declined by $US50 a share.

"The current board and management have destroyed significant shareholder value," Mr Mulacek argued in a recent shareholder communication, claiming it has "failed to provide effective management oversight and has adopted a flawed managerial and operational structure".