Regional LNG: PNG okays InterOil?s LNG project

Australian firm InterOil Corporation announced on Thursday 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.

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 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.(alex)