InterOil gets green light on Gulf plan
INTEROIL can now proceed with its LNG plant project in Gulf for the long-term benefit of Papua New Guinea and its stakeholders.
The company announced this following the cabinet’s decision for a 50-50 split between the state and InterOil in the development of the Gulf LNG project.
Prime Minister Peter O’Neill said in a statement that the National Executive Council (NEC) had approved the 50-50 project.
Under the deal, the government would acquire an additional 27.5% stake over and above its legal 22.5% entitlement managed by state nominee Petromin.
O’Neill said the NEC’s decision confirmed that the basis of the acquisition would be commercial market terms.
“Elk and Antelope are carbonate reservoirs, technically part of the same field, but separated by a major fault.
“The acquisition would give the government a combined half interest in the Elk-Antelope assets.
“It is probable that some of this equity would be managed for the benefit of capital-lacking landowners.
“The NEC also includes as a condition of its approval an agreement with regard to an internationally recognised operator of the facilities.
“InterOil is ready to participate in these discussions, which it expects will begin shortly,” he said.
O’Neill said the terms in which the state would acquire the additional equity still needed to be agreed.
O’Neill added that the cabinet had also flagged the possibility of two separate development paths.
“The cabinet approved that the project may be commercialised equally and simultaneously on a 50-50 basis between the state and InterOil based on the available saleable gas, using two separate processing facilities,” he said.
He said an internationally recognised LNG operator should operate the upstream facilities, meaning that the government still wanted a major player to buy an operating stake in Gulf LNG.
The announcement alluded that Petroleum and Energy Minister William Duma last year criticised the development for straying from the original project agreement struck in 2009.
The cabinet has now approved the “conditional withdrawal” of its notice to terminate the 2009 project agreement.
This is subject to the parties agreeing to certain conditions, including “developing saleable gas on a 50-50 basis”.
A ministerial gas committee headed by Duma has been formed, while a separate bureaucratic negotiation team has also been established with representation from the petroleum department, treasury, the justice department and Petromin.
These teams have been charged with fast-tracking the negotiations leading to commercialisation of the country’s second LNG project (after the ExxonMobil-operated PNG-LNG scheme).
It was anticipated that the state will take its entitlement to gas from the project to be used in part in domestic power generation and natural gas related industries thereby providing a boost to PNG’s growth and prosperity.
InterOil says, it will proceed with its plans for an LNG plant in Gulf with an initial output of a minimum 3.8 million tonnes per annum”.
“Over and above the 22.5% interest to which it is entitled under the Oil & Gas Act, on terms to be negotiated with InterOil”.
“InterOil is pleased to be able to provide this opportunity to the state, and is the first developer of a major oil & gas project to do so.
“Now that the \government’s position has been clarified, InterOil anticipates being able to conclude an agreement for a sale of an interest in the Elk and Antelope resource in petroleum retention licence 15 and the first 3.8 million tonnes per annum Gulf LNG Train to a partner or partners in the coming weeks”, the company says.
Major oil companies, national oil companies, and Asian utilities have been actively engaged in the process.
InterOil said it appreciated the support from the Prime Minister, the Minister of Petroleum and Energy, and government departments in reaching this stage in the LNG project approval process.
“We look forward to bringing this LNG project on-line, for the long-term benefit of Papua New Guinea, InterOil, and all project stakeholders,” the company said.
19th November 2012