Shell eyes InterOil tie-up in PNG
Shell’s chief financial officer Simon Henry said during a second-quarter earnings call that his company “(has) been in discussion with various parties” in Papua New Guinea, including InterOil.
He did not elaborate.
Shell chief executive Peter Voser added that the supermajor has “talked to the government” and is “looking at” a tie-up with InterOil.
"At the end, it will be profitability driven. It will be: Can we do a project in a safe and reliable way, and will it deliver the performance? I think to answer that question, it is too early for that," Dow Jones quoted Voser as saying.
InterOil has been trying to find a partner to help it develop large onshore deposits of natural gas it has found on three prospecting licenses in the island nation.
The proposed three-pronged Gulf LNG project hit a snag earlier this year when Flex LNG and Samsung Heavy Industries – which were to provide a hull for a floating LNG facility – allowed its deal with InterOil to lapse due to uncertainty over the project’s final investment decision.
InterOil and Pacific LNG, joint venture partners in the Gulf LNG project, have delayed approval of the final project several times. The project also includes a proposed condensate-stripping component with Japan’s Mitsui as well as a mid-size LNG plant in partnership with Australia’s Energy World Corporation.
A final decision on the condensate-stripping component, previously delayed until the end of last month, was delayed again until the end of the year.
The Papua New Guinea government has been losing patience with the Gulf LNG partners, and has criticised its development as “fragmented”.
InterOil has said for months that it is progressing well in the process to find an “internationally recognised” LNG operator, as per the government’s request. It is looking for someone to take on a 25% stake in the project.
Alan Troner, the head of Asia Pacific Energy Consulting, said he “wouldn’t be surprised” if Shell was interested because the “gas resources are there for at least an initial first phase”.
Interest from Shell would be a “pretty positive development (for InterOil), because if you have a respected company that has launched how many LNG projects around the world”, the project becomes more viable.
“The government wants a small realistic project,” Troner said. “It’s more realistic now, if you have a company (like Shell) that can do everything.”
InterOil did not return a call for comment on Thursday afternoon.
The company's shares closed up 12.26% at $84.70 on Thursday on the NYSE.
