Multiple Schemes in Play for 6 Bidders

[Tree]

Couple of things.  Scheme will depend on partner.  Stick Built/Modular/FLNG all in play.  FEEDs for all schemes must be underway or completed.  Short-list is at least 6 (hohoho) in number.  Per sources - Not all bidders  (MAJORS) prefer Gulf LNG as configured by IOC. That means, some do, likely JKM.   There exists doubt in E/A resource for some bidder(s).  That's kinda hard to still beleive.   

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InterOil still seeking clarification despite Elk-Antelope assurances

By Russell Searancke Wellington

 06 September 2012 22:59 GMT

InterOil has received confirmation that the Papua New Guinea government will not cancel the company’s liquefied natural gas project based on the Elk-Antelope fields, but there is no clarity on what shape the development will take.

Sources in Papua New Guinea said the development concept will not be known until after a major LNG company joins the project.

The Papua New Guinea government had previously instructed InterOil to introduce an LNG major.

The Canadian company has received up to six offers. Shell is understood to be one, Chevron is another. National oil companies are also in the mix.

However, sources said InterOil’s current development concept is unpopular with all the interested LNG partners, and there is uncertainty about the size of the Elk-Antelope resource.

Therefore, it is likely to be some time before a development concept is finalised. However, at least InterOil has the government’s support.

“Negotiations between the government and InterOil will continue with a view to finalising detailed specifications of the proposed LNG project satisfactory to the state,” said InterOil. The final concept will need to be approved by Papua New Guinea’s National Executive Council.

The project hit the skids last November when Papua New Guinea’s Minister of Petroleum & Energy William Duma criticised the “fragmented” development concept which Duma said was not in keeping with the 2009 LNG project agreement between the two sides.

InterOil and joint venture partner Pacific LNG had broken up the project into three separate schemes — a condensate stripping project, a medium-size onshore LNG plant, and a floating LNG solution.

The project lost momentum again during Papua New Guinea’s elections, but sources said re-elected Prime Minister Peter O’Neill had recently urged Duma to be more conciliatory with InterOil rather than the threatening line during the pre-election period.

Under the 2009 project agreement, the scheme had a minimum capacity of 7.6 million tonnes per annum of LNG expandable to 10.6 million tpa from a single site near InterOil’s refinery at Napa Napa, Port Moresby.

[danross70]

Source? Good news if correct. Now time for PNG to get it together and approve a plan. I still see JKM asmaking a lot of sense.

[Palm]

Those good old "sources" seem to have real issues with IOC. Yet when real sources are named (JKM, O'Neill, Duma, GG, etc), there is support and interest in the project and little question on the EA resource. Good practice to ignore "sources" who are unnamed, or at least give them little weight.

[jft310]

The solution as to does IOC has the assets at E/A is quite simple and is resolved in many Oil and NG partial sales. One pays something upfront and the balance gets paid out as the assets are produced. If you think an asset is worth $10 do you want to pay $10 for it or $5?????I imagine Shell based on their history is the low ball bidder and frankly with 5 other bidders who cares??

[bertl05]

Couple of things.  Scheme will depend on partner.  Stick Built/Modular/FLNG all in play.  FEEDs for all schemes must be underway or completed.  Short-list is at least 6 (hohoho) in number.  Per sources - Not all bidders  (MAJORS) prefer Gulf LNG as configured by IOC. That means, some do, likely JKM.   There exists doubt in E/A resource for some bidder(s).  That's kinda hard to still beleive.   

**********

InterOil still seeking clarification despite Elk-Antelope assurances

By Russell Searancke Wellington

 06 September 2012 22:59 GMT

InterOil has received confirmation that the Papua New Guinea government will not cancel the company’s liquefied natural gas project based on the Elk-Antelope fields, but there is no clarity on what shape the development will take.

Sources in Papua New Guinea said the development concept will not be known until after a major LNG company joins the project.

The Papua New Guinea government had previously instructed InterOil to introduce an LNG major.

The Canadian company has received up to six offers. Shell is understood to be one, Chevron is another. National oil companies are also in the mix.

However, sources said InterOil’s current development concept is unpopular with all the interested LNG partners, and there is uncertainty about the size of the Elk-Antelope resource.

Therefore, it is likely to be some time before a development concept is finalised. However, at least InterOil has the government’s support.

“Negotiations between the government and InterOil will continue with a view to finalising detailed specifications of the proposed LNG project satisfactory to the state,” said InterOil. The final concept will need to be approved by Papua New Guinea’s National Executive Council.

The project hit the skids last November when Papua New Guinea’s Minister of Petroleum & Energy William Duma criticised the “fragmented” development concept which Duma said was not in keeping with the 2009 LNG project agreement between the two sides.

InterOil and joint venture partner Pacific LNG had broken up the project into three separate schemes — a condensate stripping project, a medium-size onshore LNG plant, and a floating LNG solution.

The project lost momentum again during Papua New Guinea’s elections, but sources said re-elected Prime Minister Peter O’Neill had recently urged Duma to be more conciliatory with InterOil rather than the threatening line during the pre-election period.

Under the 2009 project agreement, the scheme had a minimum capacity of 7.6 million tonnes per annum of LNG expandable to 10.6 million tpa from a single site near InterOil’s refinery at Napa Napa, Port Moresby.

Nice find Tree. My opinion on JKM is different than yours. I don't think they like the former Gulf LNG configuration, or at least some of the parties involved. I would think that that if the Japanese Govt (japex) was going to use modular, that they would want the units to be built by a japanese firm. Its a technology that is not unfamilar to them. Just my 2 cents. I still believe that JKM is more inclined to want a traditional plant at EA.

I'd love to see JKM deliver modular units for EA giving us early production. One of the advantages of JKM is the financing power they bring along to the project. I think they make a great fit for the project.

[jft310]

Bert
Mitsui could make the modules and deliver a stick built plant and someone like Petronas could operate the plant if necessary. Modules on site and running in 3 years or so. And then the PRE deal for reinjecting the NG at T-2 with early condensate cash flow.

[kerekesc]

"There exists doubt in E/A resource for some bidder(s)."  I find this hard to believe!  If this is true, why would they be short-listed?  Or more relevantly, why would they want to be short-listed?  Or, why would they even want to bid?  This does not make sense to me.

[TxPm]

I'd be willing to bet that if this is true that it's simply a tactic being utilized by 1 of the 6 bidders to low ball the deal. Like JFT said though If one company wants to "question" the resource size that's fine we still have 5 other bidders who aren't questioning the size. People need to understand whether we agree with their tactics or not RDS did not become an international powerhouse by letting small oil companies negotiate asset prices. RDS through what I would personally consider fair & unfair means will do what they can to buy an asset for as cheap as possible.

One other thing to consider here is this. We all know Duma prefers RDS. If RDS through these tactics can "scare away" one or two of the bidders & then "up their offer" they may have significantly more leverage than if there were 5 competing offers...just my opinion though

[kkozkkoz]

Maybe the doubt over the size of the E/A resource is just how LARGE it is and not how small it is. With only a couple of wells drilled maybe some bidders are looking at the possible upside of the field.

[Spartina]

excellent point koz