InterOil Signs MoU with PNG Government

InterOil Corporation has signed a Memorandum of Understanding with the Independent State of Papua New Guinea for natural gas development projects in Papua New Guinea, and also signed a tri-party agreement between InterOil Corporation and Merrill Lynch Commodities (Europe) Limited and an affiliate of Clarion Finanz AG, that has resulted in the formation of the National Gas Development Company.

The Memorandum of Understanding ("MOU") with the Government of Papua New Guinea, subject to conditions precedent to a binding agreement, will result in InterOil assisting in the domestic processing of natural gas in Papua New Guinea to enhance the Queensland gas pipeline.

This newly formed entity, the National Gas Development Company will seek to build and develop a natural gas liquids facility ("NGL") and an onshore liquid natural gas ("LNG") facility in Papua New Guinea. The development of onshore facilities will significantly improve the economy and lead to a substantial increase in employment and investment in the country.

InterOil is widely recognized as being the largest value added processing facility in PNG and has existing infrastructure that can complement the onshore processing facilities for natural gas.

"The formation of the National Gas Development Company through the support of Merrill Lynch Commodities (Europe) Limited and Clarion Finanz AG, will allow InterOil to develop projects knowing that the burgeoning growth in the demand for gas and its associated liquids in this region must be filled. The solid infrastructure that InterOil has built in Papua New Guinea is ideally suited and situated for developments in this area," said Mr Phil Mulacek, Chairman and Chief Executive Officer of InterOil. "We share the belief of the Government of PNG that the creation of a sustainable processing industry in-country will contribute towards a brighter future for its citizens and enhance the economic improvement of Papua New Guinea."

InterOil is developing a vertically integrated energy company whose primary focus is Papua New Guinea and the surrounding region. Its assets comprise an oil refinery, upstream petroleum exploration licenses, and retail and commercial distribution assets. The majority of the refined products from InterOil's refinery are secured by off-take contracts with Shell and InterOil's wholly-owned subsidiary, InterOil Products Limited. BP Singapore is InterOil's agent for crude oil supplied to the refinery. InterOil is also undertaking an extensive petroleum exploration program within its eight million acre license area located in Papua New Guinea.