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+--- Thread: InterOil Makes New Offer To Kickstart PNG Gas Plan (/showthread.php?tid=1812)
RE: InterOil Makes New Offer To Kickstart PNG Gas Plan - petrengr1 - 10-17-2012
I think the most dependable information is in the Raymond James Update. They said they had talked to Management.
I doubt that the Government will take the full 50% as it would cost too much money. They will have to pay the sunk cost for the first 22.5% and "commercial price" for any amount above the 22.5%. I think they will need to save some money to pay for roads, power plants, distribution system and their share of LNG Plant, pipeline, CSP etc. Their additional percentage may be fairly small and will, therefore, not change the sell down process very much.
I am waiting to see if we have to have a Super Major Operator and/or Partner.
RE: InterOil Makes New Offer To Kickstart PNG Gas Plan - Palm - 10-17-2012
Jake, a good read is the comments from Raymond James. They have spoken to management and are talking about 2 deals. We all need to open our minds a little and think of the possibility of these 2 deals. In our talk with WA yesterday AM before all of this broke (Told Orlando this AM that he and I need to stop talking with WA; a year ago we were on a conference call with him and asked him about Duma. He said they saw his as neutral at worst. Within days the Shell fiasco hit). Wayne stated clearly that IOC has chosen its #1 partner and are just waiting for the NEC approval to take next steps; mainly to be sure there is nothing in the amended 2009 PA that would require further talks with the proposed partner. IOC does not anticipate anything like that. This letter was written by Liquid Niugini to PNG. I think there is little chance IOC management hasn't kept final bidders informed of where this could go. That would be foolish and Pavel's comments today don't seem to indicate any surprise that this was going on. WA also said that they are in constant contact with Duma and O'Neill as the 2 liasons with the NEC. IOC and the government are "fully aligned" on the project. Again, that indicated to Orlando and Dawn and me that this is all part of the PNG govt plan to take care of their needs as a nation.
I really think this is a plan that has evolved fully WITH the PNG government AND the SD bidders. We have heard many bits and pieces of this (Phil mentioned some of the gas being used domestically, etc). Today was another very organized effort during OE week which negated any positive effect of announcing the refinery loan. People have said it was important, have asked when it would be announced, and SOMEHOW on the day it's announced, the previous evening in Asia this article appears where the WSJ guy sees a copy of the Liquid Niugini letter. Funny how that happened.
IOC is no different than yesterday at this time. They are moving ahead toward a very good deal and project. As in the past the pps will recover and we will see its potential realized IMHO. These are small bumps.
RE: InterOil Makes New Offer To Kickstart PNG Gas Plan - Tree - 10-17-2012
This article foretold a few of today's revelations.
**********
InterOil trains its aim on onshore PNG option
By RUSSELL SEARANCKE Welington 04 October 2012 22:59 GMT
CANADIAN company InterOil has confirmed its liquefied natural gas project in Papua New Guinea will follow a more traditional development model based on an initial train producing 4 million tonnes per annum of LNG.
The changes are not unexpected as InterOil and joint venture partner Pacific LNG were under a lot of pressure from the PNG government to change the previous concept.
The new model confirms that the previous proposal of a mid-scale modularised onshore plant, combined with a floating LNG vessel, is no longer an option.
In its place is a single onshore LNG train of 4 million tpa, which InterOil said it hopes to bring on stream in 2016, followed by a second identical train two years later.
Project capital expenditure for the two-train project is between $8.3 billion and $9.3 billion. Plans also accommodate a potential third train.
InterOil said a major cost saving has been achieved by changing the location of the proposed LNG plant from the Port Moresby area to the Bluff area closer to InterOil’s Elk-Antelope gas and condensate fields, which are the feedstock source.
The company said it is “ready to go” to a final investment decision “as all project segments are financeable, but is dependant on PNG government permits, licences and land”. The contracting strategy could not be confirmed as Upstream went to press.
There are other unknowns, including the government’s response to the new plan, and the big issue of which major company will join the project as operator.
The PNG government had previously instructed InterOil to introduce an LNG major, and it is understood InterOil has received six offers from companies, including Shell, Chevron and national oil companies.
Once a partner is introduced, InterOil said the type of LNG technology would be selected.
InterOil claims it has already used world-class LNG contractors such as WorleyParsons, Siemens, Mitsui, Toyo Engineering, Hyundai and EDG. There are other uncertainties, including the project’s gas reserves, although InterOil takes a positive view, with third-party evaluations giving a low estimate of 6.19 trillion cubic feet of sales gas and a high estimate of 9.94 Tcf of sales gas.
There are also understood to be uncertainties over the equity ownership of the gas.
InterOil has just spudded the Antelope-3 onshore appraisal well in a bid to prove up field reserves, and also plans to soon drill the Elk-3 development well.
In terms of LNG offtake, there are four heads of agreements in place for a total of between 3.3 million tpa and 3.8 million tpa, with Noble Group, Gunvor, ENN Energy and a Philippines power project.
RE: InterOil Makes New Offer To Kickstart PNG Gas Plan - TxPm - 10-17-2012
"There are also understood to be uncertainties over the equity ownership of the gas."
I'm guessing that statement was referring to the news released today
RE: InterOil Makes New Offer To Kickstart PNG Gas Plan - Tree - 10-17-2012
'TxPm' pid='11330' datel Wrote:"There are also understood to be uncertainties over the equity ownership of the gas." I'm guessing that statement was referring to the news released today
Agreed TxPm gas ownership it's being negotiated. This deal may be a template for how IOC does bussiness with PNG in all the fields. It also reduces the incentive for a hostile take over as PNG can claim half the resource.
The 4 Mtpa start-up, with incremental growth to 12Mtpa is what those 6 bidders are bidding on. And it sounds like PNG may take their 4Ts and go elsewhere. WAG on where elsewhere.
PNG sells dry their dry gas to XOM for 3-5 yrs. while a new Shell mega plant is built near PM. Then EA gas is diverted to Shell plant. This allows XOM time to find more gas and Shell to have a feed source to commit to a project. It also keeps IOC from needing to deal directly with Shell.
Chances are Shell could feed a 10 Mtpa plant with only PNG's share of E/A and T-2 and their will be future fields they have minimally a 22.5% stake in. PNG could have enough gas to continue feeding PNG LNG if needed if T-2 is as billed and Wahoo and PRL 236 are tapped. IOC's problem is not enough money and too much gas and like Phil said 18 mos ago, 'the big guys want more LNG quicker'.
So we get a big plant, keep all the condesates, sell dry gas to a couple big plants and keep finding more gas/oil. Not a bad gig.
RE: InterOil Makes New Offer To Kickstart PNG Gas Plan - Palm - 10-17-2012
To me this line of the (I'm sure very ethically obtained) letter is very important:
"But in a significant change, the proposal gives Papua New Guinea the right to the next 4 trillion cubic feet of gas supply from the Elk and Antelope fields that it could use for a smaller LNG project as well as meeting domestic power needs."
What this says to me is the smaller LNG project is their desired FLNG. Petromin has an agreement with Daewoo and the NEC has approved that FLNG for use. It's the only "smaller" LNG project that makes sense. The other possibility is a Shell FLNG; they have contracted several FLNGs from Samsung. This would take, say half of that "gas supply" from EA and turn into LNG for export to China or whomever. They might even share the wharf with IOC who might be free to use the Samsung/Flex FLNG for gas above the 8Ts.
The remainder of the "gas supply" (assuming 2Ts) that PNG would get could be piped once conditioned to a power plant. Who conditions this gas?
A comment I've not seen here is that this letter seems to indicate that the parties have agreed there are at least 8Ts of gas at EA. And more. The letter states LNGI and partners get the first 4 Ts, PNG would get the "next" 4Ts. This indicates to me there is probably more. What happened to that lowly 6Ts the shorts were pounding their tables about?
RE: InterOil Makes New Offer To Kickstart PNG Gas Plan - TxPm - 10-17-2012
This argument made by the attorney general sounds an awful like what we are hearing now....
Monday, 15 October 2012
ATTORNEY General and Justice Minister Kerenga Kua reportedly said the government should review laws regarding its participation in petroleum and mining projects.
PNG's Parliament House. Photo by Greg Leech.
At a National Research Institute-backed forum last week, Kua reportedly discussed the difficulties the government faced in regards to meeting capital expenditure costs for resource projects it elected to take stakes in.
“Perhaps we should look at a production sharing arrangement where the state and other partners each get their own share of the final produce, like gold, oil and gas, to sell to at markets it is able to find,” he said according to the Post-Courier.
The minister has reportedly blamed conditions set by the Asian Development Bank on state-owned enterprises for their poor performance.
“The cost runs into billions of kina with the LNG project [PNG LNG] and the state simply does not have that sort of money,” he reportedly said.
“Our resource SOEs such as Petromin and Mineral Resources Development Company are co-developing the country’s natural resources in partnership with the private sector but they are limited in how they can do this because of the restrictions imposed by many of the multilateral and bilateral donor agencies that are not even involved in the projects concerned.”
Last year members of the previous government led by Prime Minister Peter O’Neill sparked fears with their proposals to amend mining and petroleum laws to give community-based landowners ownership of natural resources instead of the state.
But O’Neill stepped in and effectively halted this movement.
RE: InterOil Makes New Offer To Kickstart PNG Gas Plan - warrenkj - 10-18-2012
I re-read the WSJ article to figure out what it really means. The only conclusion is it's an another form of Sell-Down. The only differnece is it's the PNG, not a private entity.
Price action? I have no idea. However, as RJ Update stated, it's a positive news, just adding one more buyer!