THE US$450 million (K1.22 billion) front-end engineering and design (FEED) work for the second liquefied natural gas (LNG) project has finally started after almost two years of delays. The pre-FEED started two months ago when Prime Minister Sir Michael Somare gave his assurance that the project agreement would be signed,  InterOil Corp’s chief executive officer and chairman Phil Mulacek said And the US$450 million (K1.22 billion) FEED for the LNG itself would start later during the course of the project now that project developer InterOil Corp and the National Government have signed the deal.
Mr Mulacek said the FEED, which started two months ago, was that of early condensate and also had commissioned some of the early work for the Elk/Antelope project in Wabo, Gulf province. “Pre-FEED, heavy pre-FEED and earlier condensate began  two months  ago and along the way  everything else will fall into place,” he said, adding there were bigger partners being considered for the FEED work and InterOil was now in the process of selecting them. “Some technical work we will get done and others will wait for bigger partners,” he said.

FEED was to have started in January last year, 30 days after a project agreement was signed, but this had not happened until two months ago following Sir Michael’s verbal assurance for an agreement. Liquid Niugini Gas Ltd (LNGL), a company in which InterOil has 52% ownership, was to have executed the FEED following negotiations also on engineering, procurement, and construction (EPC) it held with Bechtel in December 2007.

The US$450 million (K1.22 billion) was put together for FEED by the joint venture partners during the initial stages of the project. “We are designing a plant that will last for decades with proven technology, so that means, we are going to have a lot of cost-efficiencies versus other applications,” Mr Mulacek said. Petromin PNG Holdings Ltd, a 100% State-owned entity, will participate in the project for the Government’s 22.5% (2% for landowners) interest in the project.

According to InterOil, the LNG project targeted a US$6.0 billion (K17 billion) two-train LNG facility, with each train capable of producing about four million tonnes of LNG per year.