Looks like all systems go..

InterOil sees investment decision on Gulf LNG project in months

PERTH | Mon Nov 28, 2011 5:41am EST

Nov 28 (Reuters) – InterOil Corp is on track to make a final investment decision on its $6-billion Gulf LNG project in Papua New Guinea in the next few months and expects to receive government approval for the project.

The Papua New Guinea government criticised InterOil’s project plan earlier this year on grounds that it fell short of the project that had originally been approved.

“We are very confident that we are on track to build this plant with full support of the government of Papua New Guinea,” Dinny Kutty, InterOil’s chief accountant, said at an industry conference in Perth, Australia.

“I’m not going to give a date, but the government wants this project off the ground as soon as possible. It is providing huge economics to the country,” Kutty said, adding that the company was targeting late this year or early next year, while the Papua New Guinea government wanted to see a final investment decision by the end of the year.

A spokesman for Papua New Guinea’s state-owned oil company, Petromin PNG Holdings, was not immediately available for comment.

InterOil is also in the process of seeking an operating and equity partner with previous LNG developement experience.

“We keep the government in the loop to make sure there won’t be any objections once the process is completed,” Kutty said.

The project, which Interoil is developing with Pacific LNG in a joint venture called Liquid Niguini Gas Limited (LNGL), will initially produce 5 million tonnes per annum (mtpa), ramping up in stages to 7.6 mtpa and 10 mtpa.

The company currently has sold 2.3 mtpa, or less than half of the plant’s initial capacity, through preliminary sales agreements, with 1 mtpa each going to Noble Group and Gunvor, and 0.3 mtpa going to the Philippines’ EWC.

LNG developers typically try to lock in around 85 percent of sales contracts before making a final investment decision on a project.

“We are confident that there will be more (agreements) in the near future,” Kutty said, adding that InterOil aimed to sell another 2 to 3 million tonnes in the next few months.

“There’s definitely interest from the Asian region because there’s a lot of demand for LNG,” said Kutty, adding that the project would break even at a sales price of $0.70 per mmBtu, including revenue from condensates also produced by the project.