Exxon, InterOil Discuss PNG Assets

SYDNEY - Exxon Mobil Corp. is in exclusive talks with InterOil Corp. to invest in the latter's natural gas assets in Papua New Guinea, a move that could cement the impoverished Southeast Asian country's position as a new significant energy exporter. 

International energy companies are upping their bets on regions that have previously played only small roles in the global energy industry in response to Asian demand for clean fuels. Papua New Guinea, better known for its jungles and tribal society, is due to start receiving a major revenue windfall next year when the Exxon Mobil-led $19 billion PNG LNG project starts up. 

Houston-based InterOil owns the Elk and Antelope natural gas discoveries in Papua New Guinea. In 2009, it signed an agreement with the government to develop a large-scale liquefied natural gas project on the country's south coast. 

"ExxonMobil is in exclusive negotiations with InterOil over the Elk and Antelope developments," an Exxon spokeswoman said by telephone from Port Moresby, Papua New Guinea's capital, Friday. 

In a statement confirming the talks with Exxon, InterOil said it is discussing whether gas from the Elk and Antelope fields would support an expansion of the PNG LNG project or a new gas-export facility. It didn't specify financial terms. 

Papua New Guinea's government has insisted that InterOil bring in a company with experience in building and operating a multibillion-dollar LNG facility, and in the past has threatened to terminate the 2009 agreement if its demands weren't met. In September 2011, InterOil hired UBS AG, Morgan Stanley and a unit of Australia's Macquarie Group as advisers to find a buyer for stakes in the gas fields and a proposed export plant. 

Relations between InterOil and the government have warmed as it became clearer the company was closing in on a preferred development partner. 


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Copyright (c) 2012 Dow Jones & Company, Inc.


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