Their 22.5% of the dry gas from the CSP currently allocated by the Project Agreement will go to a Petromin Floating LNG (remember they already have approval for one) that will be a JV with Shell.

PNG wants more percentage of the project. Up to 27.5 pct. That will be more dry gas from the CSP to go directly into a pipeline grid that feeds a set of power plants (two have been identified so far). The pipeline costs will be covered by the Chinese loans.

The production wells, CSP, reinjection wells, and pipeline will be operated by the Sell Down Partner.

The IOC LNG Plant will be selected by the Sell Down Partner. Whether EWC is in or not depends on who the Sell Down Partner is. JKM may not accept EWC. They want to use the Air Products LNG Process.

Maybe someone else will accept EWC .

The real question in my mind is how they want to fast track Triceratops. They could easily use EWC modules to process gas from Tri if they get quick approval for that project.

'jft310' pid='12735' datel Wrote:Where will the PNG get the money to pay IOC??? Look at the Shell and Petromin agreement again. IOC has a deal with Petromin who then can hire who they want for their NG.Shell in their agreement states they will front the PNG govt for a deal like this.So we have a funding source for IOC. The PNG govt has agreed to PRE at Triceratops. That commercial agreement is for $2.85 Net Present Value per mcf. Thats the only commercial deal IOC has and its the latest price for a NG deal on PNG. Exxon/OSH was in the $2.20 per mcf.range.Shell can use GCA estimates but a lot of the money will be pay as you produce with a LARGE down payment.So what the estimates are from whom just doesn't matter. Based on information available this is the most likely scenario.

The part I don't understand is that yesterday they were talking about PNG taking their gas in kind - and in exchange for not paying their 22.5% share of the costs, their take of the gas would come second to IOC's 3.8mpta project.  Is this all out the window? What percent of the costs is PNG govt on the hook for here? And presumably their own project will not take second fiddle to IOC's? I agree this is great if we find out they are paying PRE levels, but I don't like that the release seems to imply that approval is contingent upon PNG govt taking an extra stake (maybe i'm not reading correctly) - seems like IOC has little leverage to negotiate on price.

'bam' pid='12745' datel Wrote:

'jft310' pid='12735' datel Wrote:Where will the PNG get the money to pay IOC??? Look at the Shell and Petromin agreement again. IOC has a deal with Petromin who then can hire who they want for their NG.Shell in their agreement states they will front the PNG govt for a deal like this.So we have a funding source for IOC. The PNG govt has agreed to PRE at Triceratops. That commercial agreement is for $2.85 Net Present Value per mcf. Thats the only commercial deal IOC has and its the latest price for a NG deal on PNG. Exxon/OSH was in the $2.20 per mcf.range.Shell can use GCA estimates but a lot of the money will be pay as you produce with a LARGE down payment.So what the estimates are from whom just doesn't matter. Based on information available this is the most likely scenario.

The part I don't understand is that yesterday they were talking about PNG taking their gas in kind - and in exchange for not paying their 22.5% share of the costs, their take of the gas would come second to IOC's 3.8mpta project.  Is this all out the window? What percent of the costs is PNG govt on the hook for here? And presumably their own project will not take second fiddle to IOC's? I agree this is great if we find out they are paying PRE levels, but I don't like that the release seems to imply that approval is contingent upon PNG govt taking an extra stake (maybe i'm not reading correctly) - seems like IOC has little leverage to negotiate on price.

IOC has options for leverage. One being that they could opt to sell all of E/A to a SM and let the PNG govt deal with them instead of working out a fair and equitable deal with IOC.

'bam' pid='12745' datel Wrote:

'jft310' pid='12735' datel Wrote:Where will the PNG get the money to pay IOC??? Look at the Shell and Petromin agreement again. IOC has a deal with Petromin who then can hire who they want for their NG.Shell in their agreement states they will front the PNG govt for a deal like this.So we have a funding source for IOC. The PNG govt has agreed to PRE at Triceratops. That commercial agreement is for $2.85 Net Present Value per mcf. Thats the only commercial deal IOC has and its the latest price for a NG deal on PNG. Exxon/OSH was in the $2.20 per mcf.range.Shell can use GCA estimates but a lot of the money will be pay as you produce with a LARGE down payment.So what the estimates are from whom just doesn't matter. Based on information available this is the most likely scenario.

The part I don't understand is that yesterday they were talking about PNG taking their gas in kind - and in exchange for not paying their 22.5% share of the costs, their take of the gas would come second to IOC's 3.8mpta project.  Is this all out the window? What percent of the costs is PNG govt on the hook for here? And presumably their own project will not take second fiddle to IOC's? I agree this is great if we find out they are paying PRE levels, but I don't like that the release seems to imply that approval is contingent upon PNG govt taking an extra stake (maybe i'm not reading correctly) - seems like IOC has little leverage to negotiate on price.

I see it this way. IOC needs a robust PNG and PNG still needs a robust IOC.. O'Neil and Phil M are best friends now a marriage made in Heaven.

'bam' pid='12745' datel Wrote:

'jft310' pid='12735' datel Wrote:Where will the PNG get the money to pay IOC??? Look at the Shell and Petromin agreement again. IOC has a deal with Petromin who then can hire who they want for their NG.Shell in their agreement states they will front the PNG govt for a deal like this.So we have a funding source for IOC. The PNG govt has agreed to PRE at Triceratops. That commercial agreement is for $2.85 Net Present Value per mcf. Thats the only commercial deal IOC has and its the latest price for a NG deal on PNG. Exxon/OSH was in the $2.20 per mcf.range.Shell can use GCA estimates but a lot of the money will be pay as you produce with a LARGE down payment.So what the estimates are from whom just doesn't matter. Based on information available this is the most likely scenario.

The part I don't understand is that yesterday they were talking about PNG taking their gas in kind - and in exchange for not paying their 22.5% share of the costs, their take of the gas would come second to IOC's 3.8mpta project.  Is this all out the window? What percent of the costs is PNG govt on the hook for here? And presumably their own project will not take second fiddle to IOC's? I agree this is great if we find out they are paying PRE levels, but I don't like that the release seems to imply that approval is contingent upon PNG govt taking an extra stake (maybe i'm not reading correctly) - seems like IOC has little leverage to negotiate on price.

Bam,

That's not what the structure of the PR is.  Under the In-Kind thread I explained how this works.  According to the PR PNG wants up to 50% of EA.  For that they will have to fund anything above the 22.5% they are allowed by law at sunk cost and it is back loaded.  The in-kind refers to their proportionate share of the gas.  Instead of their share being sold in the market completely they have the option of getting that gas "at cost" out of the CSP.  They then can use it for domestics use and/or to feed either to the joint IOC LNG plant(s) or to their own LNG plant(s).  They then have optimal decision-making ability on how to get energy to power hospitals, schools, businesses, homes, etc and sell the rest to maximize return on their investment.  The gas used for domestic use basically allows them to break even on the upstream and CSP processing.  They take this gas in-kind (in lieu) of cash.

'TxPm' pid='12764' datel Wrote:Palm, My main questions are 1) the uncertainty still surrounding the project which hopefully will be gone by the 30th & 2) how does the govt pay for their share? IOC needs the cash now to further develop our projects so what % of the deal is upfront cash versus long term cash payments which hopefully this question is addressed as well

Well, even if the 27.5% deal with the govt doesn't involve any cash upfront, there is still the deal with commercial partner.

Govt. cannot use all that gas so they're going to sell it. Last time I checked Asian LNG market was pretty healthy and there are a good number of possible buyers: Shell, Exxon, China, some other offtaker..