InterOil on track to make FID by year-end

Business, Normal

The National, Thursday 01st December 2011

INTEROIL Corp is on track to make a final investment decision on its US$6-billion Gulf LNG project by the end of the year and expects to receive government approval for the project.
PNG government criticised InterOil’s project plan several months ago on grounds that it fell short of the project that had originally been approved and a National Executive Council decision on Sept 21 signed by Prime Minister Peter O’Neill.
The government earlier said if InterOil pursued a project outside of the agreement, the company would be committing a “repudiatory breach” and the contract would be terminated.
However, O’Neill had done an about-face last week and was now in support of a re-scoped project for a phased and fragmented project.
One of the major joint venture partners in the gas project was state-owned Petromin, which expressed dismay that it was not consulted regarding an agreement signed with oil-gas forwarding company Gunvor and all other commitments of the gas resources without its involvement.
The National was also aware that bureaucrats in the government were not impressed with InterOil’s habitual practice of dealing directly with politicians instead of going through the proper procedures and processes.
“These government officers are not happy and are likely to give stick by the rule book when it comes to review of the original agreement.
“They will give InterOil a tough ride,” according to a senior industry official.
 Despite this, InterOil was confident it was on track to deliver FID by the end of the year.
“We are very confident that we are on track to build this plant with full support of the government of Papua New Guinea,” Dinny Kutty, InterOil’s chief accountant, said at an industry conference in Perth, Australia, late last week.
‘I’m not going to give a date, but the government wants this project off the ground as soon as possible.
“It is providing huge economics to the country,” Kutty said, adding that the company was targeting late this year or early next year, while the Papua New Guinea government wanted to see a final investment decision by the end of the year.
A spokesman for Papua New Guinea’s state-owned oil company, Petromin PNG Holdings, was not immediately available for comment.
InterOil was also in the process of seeking an operating and equity partner with previous LNG development experience.
“We keep the government in the loop to make sure there won’t be any objections once the process is completed,” Kutty was reported as saying by Reuters.