Rift, FLEX Ink HOA for Floating Liquefaction Project Offshore PNG

Rift Oil Plc has signed a Heads of Agreement with FLEX LNG Ltd. in which the parties will work together to commercialize potential gas reserves from Rift's acreage onshore Papua New Guinea (PNG) should sufficient reserves be established.

Rift controls the petroleum prospecting licenses (PPL) 235 and 261 in western PNG. Rift has previously made the "Douglas" gas discovery in PPL 235 and is currently drilling the Puk Puk prospect in the same block.

FLEX LNG was incorporated in 2006 with the objective of commercializing the world's first floating liquefaction units (LNG Producers) and has signed four ship building contracts with Samsung Heavy Industries for LNG Producer hulls utilizing the SPB LNG containment system. This provides the LNG industry with a unique possibility of accessing currently uncommitted gas reserves for LNG production from 2011 onwards. By using the proven nitrogen expander liquefaction cycle, the most robust and flexible liquefaction technology in use in the LNG industry, an LNG Producer can source gas from numerous potential offshore locations worldwide where natural gas today is either left stranded or is being flared.

FLEX LNG and Rift have agreed to work together to develop a floating liquefaction project offshore PNG utilizing Rift's potential gas reserves should sufficient reserves be established, and one of FLEX LNG's floating liquefaction units on order.

"It's fantastic that Rift Oil has been selected by FLEX LNG in their drive to commercialize gas discoveries in remote regions, such as Rift's in Papua New Guinea, by the conversion of natural gas to LNG utilizing floating vessels," said Ian Gowrie-Smith, Chairman of Rift. "Yesterday's announcement by FLEX LNG that it has signed a Heads of Agreement with Mitsubishi and Peak Petroleum to jointly develop and market the world's first floating liquefaction project offshore Nigeria is confirmation of FLEX LNG's frontrunner status in this field. The surge in LNG prices is rewriting the economic alternatives for Rift by enabling us access to international pricing. Rift remains fully committed to the developing the opportunity to supply Rio Tinto Alcan with natural gas over the next 20 years in accordance with our existing Memorandum of Understanding with them; however any agreement with Rio Tinto Alcan will have to be economically superior to anything we may agree with FLEX LNG."

"PNG is a country with considerable undeveloped gas resources and we are excited to develop a floating liquefaction project together with Rift," elaborated Philip Fjeld, Chief Executive Officer of FLEX LNG. "By selecting a floating liquefaction option LNG could be produced several years earlier than a traditional onshore project. FLEX LNG will work together with Rift to facilitate an accelerated plan for exploration and development of PPL 235 and 261. Both parties will also be open to processing third-party gas reserves that are commercially stranded and that can be tied into the project."