Blair conflicted - IOC Aborts

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InterOil abandons LNG operator dream

Blair Price Friday, 16 August 2013 UNDER its new chief executive officer Michael Hession, InterOil will abort its previous dream to lead development of an LNG project in Papua New Guinea and instead play to its strengths, such as exploration. Wahoo-1 amid InterOil's licence portfolio in PNG. According to InterOil, ExxonMobil is still in negotiations over acquiring at least 4.6 trillion cubic feet of gas from the Elk-Antelope field to fuel a third train expansion of the PNG LNG project. While InterOil was previously keeping the door open to developing a smaller LNG project based on the remaining resources of the Gulf province field, Hession has closed it. “I can tell you today that we will not be operating an LNG project in the immediate future,” he said in a conference call earlier this week. The former Woodside executive warned of the dangers of “getting distracted” and said he wanted InterOil to do what it had a track record of achieving. “So we're going to stick to our knitting – if you'll excuse the metaphor – and that's around non-operated LNG, midstream refining and downstream distribution and upstream exploration.” PNGIndustryNews.net has additionally received information that InterOil is winding back its construction arm that carried out a variety of work for InterOil’s Elk-Antelope-based Gulf LNG project, as part of “streamlining” the business and prioritising exploration. Even though InterOil and Petroleum Minister William Duma remain keen to establish PNG’s second LNG project using the Gulf field, PNGIndustryNews.netunderstands InterOil will again not be an operator but intends to be a supplier of gas for any second LNG project. PNGIndustryNews.net also received a map that shows the location for the proposed Wahoo-1 exploration well, revealing it is about halfway between the Elk-Antelope field and Port Moresby. With one of InterOil’s rigs still in place to spud Elk-3 if a suitable deal over Elk-Antelope emerges, there is a possibility that a rig may be hired to drill Wahoo-1, which is a reefal carbonate play like the other successful wells InterOil has drilled in the region. Broken dreams Earlier this year InterOil’s Gulf LNG project was targeting 3.8 million tonnes per annum, with a processing plant to be based in Gulf province. In 2011 the project had targeted 5Mtpa in 2014 along with a ramp-up option to hit 8Mtpa through 2015 and 2016. In 2009, the project had been based on a 7.6-10.6Mtpa LNG plant near Port Moresby, back when it was known as the Liquid Niugini Gas project.