OSH comments on its loss in arbitration

[Tree]

Contact in Lexington controls over 0.4% of IOC shares. He asks if he has the right to take his share of IOC gas to Konebada Petro Park.

[Stavros]

Sure Tree

But the collective farts of SHU posters located in the US produce more gas than that.
Better to acquire the SHU fart output in portable tanks and sell it to Yuhuang Chemical Inc's upcoming methanol plant along the Mississippi River in St. James Parish, La.
That way, the Lexington folks can keep a close eye (and nose) on their investment

[ArtM72]

Love you Stavros but some of us here...ok...I am...sufficiently challenged by this all to throw into the mix inane commentary like your last post. Give us a break. We're all trying to read tea leaves here and throwing into the mix a bucket of compost doesn't help.

[Palm]

Let's say the certification comes up with a resource volume of 10 TCF and one train requires 3.5 TCF. We would have enough gas for 2 train TOT/IOC plant plus one train at PNGLNG. OSH would have the right to take their share to PNGLNG (0.177x 10 = 1.77 TCF). They would then only need to find another 1.7 TCF from other sources or TOT/IOC could make a deal with them to provide the other 1.7 TCF.

Or maybe the Gov't would elect to have their gas processed at PNGLNG for the right price.

Is it correct to assume the dispositon of all of the resource in PRL15 is subject to the majority vote of the partners?  I suspect that's the way it must work.  Assuming the base case is two trains at 3.5 TCF each then anything above that will be subject to a determination by the partners where that excess goes.  It might go to a new petrochemical park, PNG LNG, Gulf LNG, a new electric power generating plant...who knows?  Taking your 10 TCF number I can only see competition for that extra gas subject to both internal and external negotiation between IOC, its partners and potential customers.  It might be the Japanese will want to build a large DME plant in Gulf and pay near market price for the gas.

Que sera, sera.

Actually it's not safe to assume that OSH is automatically subject to majority rule. Pet is on the right line in that they likely can't be excluded from a plant that Total and IOC want to build because this project would be proposed to the participants and they would cast their share of the votes in favor of the plant and be in. However even though the intent of a JVOA is cooperation, there is recognition that at times there may be disagreement as to a plan and one or more of the non-operators could invoke a "Sole Risk" clause standard in most of these JVOA agreements. In essence they could file a request for a Sole Risk operation and after going through some hoops take their % share. It's not as simple as I state here because there has to be a Sole Risk Area designated and split etc etc, but there is provision usually for this type of thing.

[Stavros]

Tree Posted: Contact in Lexington controls over 0.4% of IOC shares. He asks if he has the right to take his share of IOC gas to Konebada Petro Park.

Stavros Posted: Sure Tree

But the collective farts of SHU posters located in the US produce more gas than that.
Better to acquire the SHU fart output in portable tanks and sell it to Yuhuang Chemical Inc's upcoming methanol plant along the Mississippi River in St. James Parish, La. That way, the Lexington folks can keep a close eye (and nose) on their investment

ArtM Posted: Love you Stavros but some of us here...ok...I am...sufficiently challenged by this all to throw into the mix inane <<< lacking sense, significance, or ideas >>> commentary like your last post. Give us a break. We're all trying to read tea leaves here and throwing into the mix a bucket of compost doesn't help.

So ... why no comment on Tree's Post to which I replied???? I guess you view his post as smart/ intelligent/ bright (ie antonym of inane)?

SMILE ... the PPS was up twoday; Richard Chandler is re-buying (IOC management are not yet ... because they are drilling???); TOT was up tooday; Oil price is steady (don't believe Citi who want Oil price too drop two protect their bad SHORT position); fighting in Ukraine may stop on Sunday; Greece may accept more money from Ms Merkel (or perhaps China will buy the country and convert it to a tourist destination for their cash-rich upper class); IS basterds are on the run because the King of Jordan and other smart leaders in the ME have had enough; NASDAQ eclipsed it's previous high water mark last achieved in 2000; SPX closed at 2,088.48 (almost at my magical number with maximum "8"s and almost at all time high); I was able too re-surface for a few minutes and re-fill my scuba tank, but I'm still under water.

By the way, take a look at the timeline that TOTAL published in their December Presentation. It shows that in May, TOTAL will finalize the Concept Selection and select the Financial Advisor. These will be big catalysts to IOC's PPS if someone has the decency to inform Shareholders when these too milestones are reached. No one mentions that on SGU; not even our head cheerleader.

Finally, the fact that a Chinese company (Yuhuang Chemical) will buy gas in the US, convert it too methanol and send it two China for Petrochemicals production is a very important development. It is, two my opinion, far better too do that than build inordinate number of LNG plants and export two energy-starved Asia.

http://yuhuang-usa.com/

[Relker]

Let's say the certification comes up with a resource volume of 10 TCF and one train requires 3.5 TCF. We would have enough gas for 2 train TOT/IOC plant plus one train at PNGLNG. OSH would have the right to take their share to PNGLNG (0.177x 10 = 1.77 TCF). They would then only need to find another 1.7 TCF from other sources or TOT/IOC could make a deal with them to provide the other 1.7 TCF.

Or maybe the Gov't would elect to have their gas processed at PNGLNG for the right price.

Is it correct to assume the dispositon of all of the resource in PRL15 is subject to the majority vote of the partners?  I suspect that's the way it must work.  Assuming the base case is two trains at 3.5 TCF each then anything above that will be subject to a determination by the partners where that excess goes.  It might go to a new petrochemical park, PNG LNG, Gulf LNG, a new electric power generating plant...who knows?  Taking your 10 TCF number I can only see competition for that extra gas subject to both internal and external negotiation between IOC, its partners and potential customers.  It might be the Japanese will want to build a large DME plant in Gulf and pay near market price for the gas.

Que sera, sera.

Actually it's not safe to assume that OSH is automatically subject to majority rule. Pet is on the right line in that they likely can't be excluded from a plant that Total and IOC want to build because this project would be proposed to the participants and they would cast their share of the votes in favor of the plant and be in. However even though the intent of a JVOA is cooperation, there is recognition that at times there may be disagreement as to a plan and one or more of the non-operators could invoke a "Sole Risk" clause standard in most of these JVOA agreements. In essence they could file a request for a Sole Risk operation and after going through some hoops take their % share. It's not as simple as I state here because there has to be a Sole Risk Area designated and split etc etc, but there is provision usually for this type of thing.

Apart from commercial reasons to delay the signing of the JOA, there might be a financial reason. IOC still has the option to reduce the property rights of OSH at a fixed price.  Whether or not IOC exercises this right depends on the size of the EA-field. Furthermore, they need to have the money which they will get after the certification.

[Palm]

And that's what I'm watching for in this Relker. What decision will this current leadership of Total come to? Move ahead, or put the brakes on EA LNG? We will know as we move ahead and they either execute the JVOA or not. I believe that's what OSH was referring to when they pointed out that the arbitrator mandated that Total prevails as long as they and IOC get required transfers, etc done. I think that speaks to requirements in the SPA and New JVOA, because once the JVOA is ratified certain requirements for timetables, budgets, etc must be put together and presented to the other interest owners for approval and implementation. That's when interest holders through the Operating Committee have votes and say in what happens.

The likely path that the arbitrator would expect is for things to get going pretty quickly since they are drilling and doing pre-Feed. If Total delays in executing the JVOA, OSH at some point, could start making waves depending on what all the arbitrator dictated.

IOC has been smart in pushing ahead with drilling plans. Would be nice if things were going more smoothly, but with the decision behind us maybe we will see that start happening. Per standard JVOA language there are powers that interest holders have should an Operator not fulfill its role, so IOC and OSH (and eventually the government) can force certain things (even go their own way) should Total not push ahead to the satisfaction of other interest owners. Makes it tougher, but if they prove up enough gas, Total would have a big choice to make.

[Relker]

And that's what I'm watching for in this Relker. What decision will this current leadership of Total come to? Move ahead, or put the brakes on EA LNG? We will know as we move ahead and they either execute the JVOA or not. I believe that's what OSH was referring to when they pointed out that the arbitrator mandated that Total prevails as long as they and IOC get required transfers, etc done. I think that speaks to requirements in the SPA and New JVOA, because once the JVOA is ratified certain requirements for timetables, budgets, etc must be put together and presented to the other interest owners for approval and implementation. That's when interest holders through the Operating Committee have votes and say in what happens. The likely path that the arbitrator would expect is for things to get going pretty quickly since they are drilling and doing pre-Feed. If Total delays in executing the JVOA, OSH at some point, could start making waves depending on what all the arbitrator dictated. IOC has been smart in pushing ahead with drilling plans. Would be nice if things were going more smoothly, but with the decision behind us maybe we will see that start happening. Per standard JVOA language there are powers that interest holders have should an Operator not fulfill its role, so IOC and OSH (and eventually the government) can force certain things (even go their own way) should Total not push ahead to the satisfaction of other interest owners. Makes it tougher, but if they prove up enough gas, Total would have a big choice to make.

It makes no sense when Total does a large license payment and put the brakes on E/A. So, I do not think this decision is still on the table.

[katytrader]

And that's what I'm watching for in this Relker. What decision will this current leadership of Total come to? Move ahead, or put the brakes on EA LNG? We will know as we move ahead and they either execute the JVOA or not. I believe that's what OSH was referring to when they pointed out that the arbitrator mandated that Total prevails as long as they and IOC get required transfers, etc done. I think that speaks to requirements in the SPA and New JVOA, because once the JVOA is ratified certain requirements for timetables, budgets, etc must be put together and presented to the other interest owners for approval and implementation. That's when interest holders through the Operating Committee have votes and say in what happens. The likely path that the arbitrator would expect is for things to get going pretty quickly since they are drilling and doing pre-Feed. If Total delays in executing the JVOA, OSH at some point, could start making waves depending on what all the arbitrator dictated. IOC has been smart in pushing ahead with drilling plans. Would be nice if things were going more smoothly, but with the decision behind us maybe we will see that start happening. Per standard JVOA language there are powers that interest holders have should an Operator not fulfill its role, so IOC and OSH (and eventually the government) can force certain things (even go their own way) should Total not push ahead to the satisfaction of other interest owners. Makes it tougher, but if they prove up enough gas, Total would have a big choice to make.

It makes no sense when Total does a large license payment and put the brakes on E/A. So, I do not think this decision is still on the table.

I don't know about you, Relker, I don't live in a binary world.  Purposeful delay need not be a hard stop.  If senior management wants to delay a quarter,  technical people themselves, to say nothing of JVOA lawyers,  are quite capable at raising issues needing clarifications, interpretations, further study, etc, ad inf.  IMO, sometimes in a multi-party situation, there may be a slow-down just because one or more is testing to see which of the others can be rolled.

katytrader

[ArtM72]

Purposeful delay would seem inappropriate for this project so long as the asset proves out to be what we expect in the next four months. There should be some high quality talent available to set up this project for the 2019-2039 natural gas demand with so many other projects being put on hold. Even some idle industrial capacity looking for work. If you believe China, India and SE Australasia desire to grow into middle class then they will have a great demand for energy. Total without a doubt has to want to fix itself square into the middle of that market.

A lot may ride on those flow tests this spring. For one I believe those world records set by Elk and Antelope were not a result of blind luck but good fortune.