A PRELIMINARY commitment agreement (PCA) signed between InterOil and Mitsui Corp of Japan for developing phase one of the Elk/Antelope LNG project has paved the way for the Japanese company to fund 100% the cost of condense stripping facilities (CSF) subject to final ratification.
The deal was signed in Tokyo, Japan last week in the presence of Prime Minister Sir Michael Somare and Petromin chief executive officer Joshua Kalinoe.
The CSF includes a liquid separation plant and pipeline in the project area, and earns tolling fees and various other benefits.
Phase one of the project includes the extraction of condensate and development of upstream LNG extraction facilities.
InterOil is the upstream operator for the Elk/Antelope LNG project and Mitsui Corp is one of the leading Japanese investment and trading companies.
Congratulating the milestone agreement, Mr Kalinoe said under the arrangement Mitsui would also fund Petromin’s share of the condensate extraction costs.
This means that Petromin and the State will not have to seek separate financing arrangements to fund their share of the equity.
Mr Kalinoe said it was one of the best project financing deals for the current partners in the project which include Petromin, InterOil and Pacific LNG.
It also means that early revenue for Petromin and the State from the condensate stripping component of Elk/Antelope LNG project where first cargo of condensate is expected by the second half of 2012.
Under the arrangements, Mitsui will co-build the extraction facilities and will receive toll fee as well as financing cost from condensate revenue at first production of condensate.