InterOil announced that the National Executive Council (NEC) of Papua New Guinea has approved the Company's project agreement for the construction of a liquefied natural gas (LNG) plant in Papua New Guinea.
As previously announced, the proposed LNG project would be developed by InterOil and its joint venture partners, including foundation partner Pacific LNG Operations Ltd. The Government of Papua New Guinea, through its nominee Petromin PNG Holdings Limited, will have up to a 22.5% equity interest in the project. The project targets a $7.0 billion two-train LNG facility, with each train capable of producing approximately 4 million tons of LNG per annum. While current plans call for first production of LNG towards the end of 2014 or beginning of 2015, InterOil is progressing a proposed liquids stripping plant, to be located in Gulf Province, in late 2011/early 2012, which would provide an attractive revenue stream to Papua New Guinea before the LNG project is expected to be completed.
The approved project agreement, which is expected to be signed before the end of the year, establishes the terms for commercializing and monetising the Elk/Antelope natural gas resources. InterOil expects that natural gas produced will be treated at a conditioning plant in the Gulf Province and then transported to the proposed LNG plant site near the Company's existing refinery at Napa Napa. InterOil anticipates that the LNG plant will be designed to operate as a tolling facility, and that the LNG will be jointly marketed by the upstream owners on behalf of the joint venture.
Sir Michael Somare, Prime Minister of Papua New Guinea, stated, "The government of Papua New Guinea has had a long and successful partnership with InterOil, and we are pleased to build on our relationship through this agreement. The strategic LNG project proposed by InterOil has the potential to provide significant benefits to the people of Papua New Guinea for years to come. Indeed, the job creation, education and ancillary economic development opportunities that are expected to result from InterOil's project will be important contributors to ensuring PNG's sustained prosperity well into the future."
Joshua Kalinoe, Petromin's Managing Director, stated, "Petromin is excited to be a major partner of the InterOil LNG project in Papua New Guinea, which has the potential to measurably benefit PNG's economic development. We look forward to a long and prosperous relationship with InterOil and believe that this project is designed to create new business opportunities, enhance training, and provide advanced education for the people of Papua New Guinea. Our national interests will be strengthened through the PNG state resources holding company."
Phil Mulacek, Chief Executive Officer of InterOil, commented, "This approval is another major milestone in advancing the monetization and commercialization of our resources we have established at the world class Elk/Antelope fields.
Mulacek added, "The infrastructure envisioned to complete the LNG project firmly establishes incentive for further exploration in the country. With the support of Pacific LNG and Petromin, we expect to develop these resources and infrastructure in a manner with industry leading economics. We look forward to moving ahead with the LNG project and working with the people and governments of Papua New Guinea."
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