InterOil and ExxonMobil playing a long game
By Russell Searancke Wellington
16 August 2013 00:00 GMT
Negotiations between ExxonMobil and InterOil are ongoing over liquefied natural gas feedstock in Papua New Guinea, with both sides playing their cards close to their chests.
InterOil’s chief executive Michael Hession said the discussions are ongoing, but would not comment on any of the details, although he confirmed they were being conducted on an “exclusive” basis, meaning no other parties are involved.
The focus of the discussions is the acquisition by ExxonMobil of an equity stake in Block PRL-15 which contains the Elk-Antelope gas discoveries operated by InterOil.
ExxonMobil reiterated earlier this month that “major terms have already been agreed (with InterOil) and should negotiations successfully conclude ExxonMobil is proposing that 4.6 trillion cubic feet of the gas resource from the Elk-Antelope field be used to underpin the construction of an additional train at the PNG LNG project site, subject to partner and government agreement”.
The US supermajor did not provide any more details.
Despite market watchers backing a tie-up between ExxonMobil and InterOil, there is a persistent agitation that political forces could still influence the outcome.
Papua New Guinea Prime Minister Peter O’Neill is said to be very keen to maintain the momentum achieved from the PNG LNG project.
However, Petroleum & Energy Minister William Duma has different motivations, and any agreement between ExxonMobil and InterOil will require his approval.
To add to the intrigue, Shell’s name continues to pop up amid speculation that it is considering a counter offer for InterOil’s resources, or a takeover offer.
The Elk-Antelope fields are understood to contain best case contingent resources of 9.45 trillion cubic feet of wet gas.
Hession confirmed that, if a deal with ExxonMobil is completed, InterOil still wants to be involved in developing another LNG project as a “non-operator”.
“I’ve got aspirations to build further LNG facilities on the basis of the existing resource or exploration success that (we) will deliver,” said Hession, who was appointed chief executive last month, replacing Phil Mulacek.
InterOil has no intention of being an LNG operator, and will instead focus on being a LNG non-operator, Hession said.
The various LNG development agreements that were signed under previous chief executive Mulacek with Mitsui, Energy World Corporation and Flex LNG have been cancelled.
“It’s very, very important to us that we’ll be pursuing the upside associated with our (upstream) assets,” said Hession.
Meanwhile, ExxonMobil’s US$19 billion PNG LNG project is powering toward first LNG sales in 2014, with the two-train scheme, 6.9 million tonnes per annum project 90% complete.
