Papua New Guinea is set to join the global LNG game in 2014 when the ExxonMobil-led PNG LNG project is scheduled to ship its first deliveries, but a major announcement today by InterOil suggests an additional LNG export project could come on stream in the Asian Pacific island nation not long after.
InterOil has been active in PNG since the late 1990's and operates the country's only refinery which supplies about 65% of domestic refined product demand. Profits from InterOil's downstream operations are often used to offset the costs of the company's LNG export project, a major long-term strategic objective for the independent firm.
The completion of that goal moved ahead today when InterOil announced receipt of government approval for a joint venture operating agreement for the project. There is much speculation about a major oil company joining the LNG export development scheme. A JV agreement would include an interest in the upstream resource and a 3.8 million ton per annum (mmtpa) land-based liquefaction plant.
"We anticipated bids from majors, NOCs [national oil companies] and global utilities and we received bids as expected," Wayne Andrews, Vice President Capital Markets told Wall Street analysts and members of the press at the International Petroleum Association of America's Oil & Gas Investment Symposium on Monday in New York.
InterOil has been working on the project for years and in April 2011, signed an agreement with Samsung Heavy Industries and Flex LNG for a 2 mmtpa floating LNG plan, but according to Andrews, "the government changed their minds," and decided to pursue a land-based facility. With the construction phase of Exxon's PNG LNG wrapping up, the PNG government is interested in transitioning employees to a new project and is thus motivated to get InterOil's project organized, sanctioned and underway.
Analysts hoping to get some clues about the companies bidding for the JV stake were disappointed when Andrews remained tight-lipped about the highly-sensitive negotiations. "We've got good interest and great advisers and should be able to announce something soon," is all he would say about the matter.