InterOil, Mitsui to Jointly Operate PNG Facility

InterOil has entered into agreements with Mitsui to jointly operate and fund the preliminary works involved to develop a proposed condensate stripping facility at InterOil's Elk and Antelope field site in Gulf Province, Papua New Guinea.

The preliminary works program is for all the works required to take us through the Front End Engineering and Design (FEED) stage for the construction of a condensate stripping plant, to the point of Final Investment Decision (FID). The Project is proposed to be designed to process 400 million standard cubic feet per day (mmscf/day) of wellhead gas with an anticipated yield of approximately 9,000 barrels (bbls) of condensate per day. Dry gas will be reinjected into the reservoir for storage until the proposed LNG facility has been constructed. The condensate will be barged to the InterOil refinery in Port Moresby for processing and sale.

InterOil and Mitsui will each be responsible for half of the capital expenditure involved in the preliminary works and Mitsui will fund InterOil's share.

Standard conditions of the agreements include the completion of FEED, an EPC agreement, and the definitive agreements by December 31, 2010, necessary to reach FID. In the event that FID is not reached, InterOil will be required to refund the capital expenditure incurred to date within a specified period.

Mr. Phil Mulacek stated, "We look forward to a long and prosperous relationship with Mitsui, one of the largest energy conglomerates in Japan. When in production, the condensate project will provide a stable platform of early cash flow enhancing the benefit to partners in our proposed LNG project."