Priority for InterOil

Business, Normal

The National, Friday 24th August 2012

THE new government plans to give priority support to ensure the delivery of InterOil Corporation’s Gulf LNG project during its term, Governor-General Sir Michael Ogio said on Tuesday.
“In this regard, the government will immediately create a state negotiating team of key agencies to negotiate a gas agreement with InterOil and its partners,” Sir Michael told the opening of the parliament under Prime Minister Peter O’Neill.
“The team will work with Petromin, the state nominee to ensure that the best gas agreement is negotiated.
“Specific consideration will be given to increased benefits for landowners, local level governments and provincial governments.”
The new government will also ensure that the ExxonMobil-led PNG LNG project is “delivered on time so that revenue flows will begin 2014”, Sir Michael said.
“These two projects will underpin our economy for the next 40 years.”
ExxonMobil is currently two years into construction of its US$15.7 billion PNG LNG project.
The facility will produce 6.6 million metric tonnes year of LNG annually from two trains.
Minister for Petroleum and Energy William Duma late last week agreed to suspend a notice of intent to terminate InterOil’s December 2009 agreement for the development of its LNG project.
The notice was issued by Duma last May on the grounds that the project did not meet the requirements under the agreement that it be based on recognised technology and operated by a major company.
The notice triggered a 180-day period during which the company and its project vehicle Liquid Niugini Gas Ltd had to take  steps to meet the terms of the project agreement.
Since then, however, InterOil had held a number of constructive meetings with government departments on the progress made on the project, Duma said.
The 2009 agreement calls for the delivery of a 7.6 million-10.2 million mt/year LNG project using internationally recognised technology and operated by a company with experience at similar-sized facilities.
 Instead, InterOil had proposed a phased development with itself as the upstream operator.
InterOil, meanwhile, is currently negotiating to bring a heavyweight partner into the project.
“With the sound backing of the new administration in PNG, we are continuing to work with our advisors to finalise selection of an LNG equity partner,” Mulacek said recently.
“The end result of the partnering process is expected to fully satisfy all the terms of the 2009 LNG project agreement.”
PNG media has reported in the past that US major Chevron was interested in partnering InterOil in the Gulf LNG project, and Duma has repeatedly pointed to Shell as a potential stakeholder.
Shell signed a strategic alliance with PNG state-owned Petromin in August last year and is actively pursuing LNG opportunities through a Port Moresby office opened in February. – PLATTS