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InterOil’s government approval take III

September 5th, 2009 · 4 Comments

Why all the fuss…

Some people might have noticed that until recently, we were among a few who expressed some concern by the lack of formal government approval for InterOil’s LNG venture. However, once the story got out this week, contrary to most others, our concerns have really decreased considerably. Which is exactly backwards as many others have it, and that seems odd to us:

  1. There is an agreement, nobody (not even the detractors) argues it needs changing.
  2. The Prime Minister and Energy Minister backing it, and quite publicly so..
  3. The arguments those who want it’s implementation postponed (which is the worst case scenario) do not stand up to even perfunctory scrutiny and will come under increasing pressure.
  4. The real reasons are that some feel the other (Exxon/OilSearch led) project needs a little temporary nursing until they’ve got their financing sorted out (off-take is not a problem).
  5. We have also reasons to believe there could be little bit more to it as some of those ministers might be afraid OilSearch stock price will be negatively affected once the InterOil project gets the green light. With the Exxon/OilSearch project already as good as sold out through long-term off-take agreements (they had to turn down prospective buyers like Korea Gas, amongst others), we think those ‘more personal’ concerns of some of the detractors (who seem to have some position in OilSearch stock) are quite overblown. In addition to the link under 4 above, perhaps they should re-read this, it’s quite reassuring…
  6. So we don’t see much reason for ‘nursing’ the Exxon/OilSearch project, which is also why we see an end to the delay on InterOil’s project approval. In the worst case, we might just have to wait until this is settled, but InterOil’s government approval is as good as done, in our view.

Yet reading the message boards Thursday night, everybody had their knickers in a twist (as the Brits have it), expecting a big sell-off on Friday. For the life of it, we couldn’t understand why, and we think Friday’s performance showed that we were spot on.

Tags: IOC

4 responses so far ↓

  • 1 Greg // Sep 8, 2009 at 9:17 pm

    I keep hearing and reading that Somare and IOC still have a few options to get the deal signed.

    Any speculation on what these might be and are they extreme measures?

  • 2 Harold Chamberlin // Sep 13, 2009 at 12:40 pm

    Dear Janine, any news? Thanks Harry

  • 3 Janine // Sep 14, 2009 at 10:53 pm

    Harry: Things going very well on all fronts.Company is more excited about the prospects for Ant #2 than they were with Ant#1.New rig soon.Politic’s take time.

  • 4 Harold Chamberlin // Sep 15, 2009 at 12:47 pm

    Thanks Janine.