Project cost less than half as much as the Exxon/OilSearch LNG plan..

But first, here is a link to a radio interview on Radio Australia with Somare and Mulacek

InterOil Claims Cost Advantage Over Exxon in Rival PNG LNG Plan
By James Paton

Dec. 24 (Bloomberg) — InterOil Corp., a Canadian energy company whose shares have risen more than fivefold in 2009, said it expects to build a Papua New Guinea liquefied natural gas venture at less than half the cost of a rival project.

InterOil estimates its LNG development will cost between $5 billion and $7 billion, compared with a $15 billion spending bill for the Exxon Mobil Corp.-led venture in Papua New Guinea, said Wayne Andrews, InterOil’s vice president of capital markets.

“We think we have an even more economic project than Exxon’s because of the cost advantages we have in infrastructure,” Andrews said in a telephone interview from St. Petersburg, Florida.

The two ventures are among more than a dozen in Australia and the South Pacific nation seeking to meet Asian demand for cleaner-burning fuels. Papua New Guinea government officials signed an agreement approving InterOil’s plan to construct an LNG plant, the company said in a statement late yesterday. Exxon and its partners, including Oil Search Ltd. and Santos Ltd., said Dec. 8 they had decided to proceed with their project.

InterOil, which ended 2008 at $13.75 a share, rose 4.7 percent yesterday to $75.87 in New York Stock Exchange composite trading.

The Exxon and Oil Search PNG plan calls for capacity of 6.6 million tons of LNG a year, while InterOil proposes two processing units that could ship 8 million tons of the fuel annually.

Jetties, Roads

The agreement with Papua New Guinea allows for an expansion to as much as 10.6 million tons, InterOil said in yesterday’s statement. First LNG production is anticipated near the end of 2014 or in early 2015, it said.

InterOil already has an oil refinery in the Papua New Guinea capital Port Moresby, jetties for delivering products overseas, roads and a camp for workers to support the proposed LNG development, Andrews said. The project also wouldn’t need to pipe the gas as far as the Exxon partners, he said.

Papua New Guinea’s economy may double in size because of the Exxon-operated project, Oil Search has estimated. The InterOil venture could boost the nation’s gross domestic product by as much as another 40 percent, Andrews said. The government will have a 20.5 percent stake in the project, the company said.

InterOil, based in Whitehorse, Yukon Territory, and run from Cairns, Australia, is behind Exxon in developing its plan. It aims to find a partner to back the project “over the next couple of months” and to make a final investment decision in about a year, Andrews said. “It’s hard to put a timeframe on it.”

InterOil said in March it would start talks with potential partners after Bank of America Corp.’s Merrill Lynch unit shed its 35 percent stake in the LNG project.

Evan Calio, an analyst at Morgan Stanley, said in a September report to clients that InterOil doesn’t have the finances to build a plant to liquefy gas without the cash from new backers.