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InterOil and Gunvor ink LNG supply deal

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InterOil and Pacific LNG have inked an Head of Agreement with Gunvor of Singapore for supply of one million tonnes of LNG per year from the Gulf LNG Project Papua New Guinea.

InterOil and Pacific LNG said that they were working to complete the negotiation and finalise a binding sale and purchases agreement with Gunvor by second quarter of 2012.

The Gulf LNG Project in Papua New Guinea comprises the Elk and Antelope gas fields and the planned liquefaction and associated facilities in the Gulf Province of PNG to be developed by Liquid Niugini Gas Ltd., InterOil and Pacific LNG’s joint-venture project company.

Source

InterOil Seeks Strategic Partner for Papua New Guinea LNG Project

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InterOil Corporation today announced that the Company has retained Morgan Stanley & Co. LLC, Macquarie Capital (USA) Inc. and UBS AG as joint financial advisors to assist InterOil with its soliciting and evaluating proposals from potential strategic partners in the liquefied natural gas (LNG) project currently being led by InterOil’s joint venture entity, Liquid Niugini Gas Limited.

The Company anticipates that these proposals will relate to obtaining an internationally recognized LNG operating and equity partner for development of the Project’s gas liquefaction and associated facilities in the Gulf Province of Papua New Guinea, together with a sale of an interest in the Elk and Antelope fields and in InterOil’s exploration tenements in Papua New Guinea.

InterOil has determined, in response to inquiry from potential LNG partners and in consultation with the Papua New Guinea Government, to engage in a formal partnering process. The considerable strengthening of the Asian LNG market, the increased interest in exploration and investment in Papua New Guinea, as well as the Company’s reservoir analysis and project design fundamentals lead the Company to believe that now is an attractive time to seek a partner.

The Company expects that successful completion of such a transaction will satisfy the objectives of complementing the Company’s planned LNG development capabilities with an internationally recognized LNG partner and generating a third party valuation for InterOil’s resources.

We look forward to working closely with Morgan Stanley, Macquarie and UBS as they support us in this evaluation process and in reaching what will surely be a milestone for InterOil, its shareholders and Papua New Guinea,” said Phil Mulacek, Chief Executive Officer of InterOil.

Original Article

InterOil, Pacific LNG sign supply deal with Noble Clean Fuels

InterOil Corp and Pacific LNG Operations have signed a heads of agreement with Noble Clean Fuels for the supply of one million tonnes per annum (mtpa) of liquefied natural gas (LNG) from the Gulf LNG project in Papua New Guinea (PNG).

The purchase and sale of one mtpa of LNG will be carried out over a period of ten years starting in 2014.

The Gulf LNG project includes Elk and Antelope gas fields and Liquid Niugini Gas, the InterOil and Pacific LNG joint-venture project firm, with modular LNG plants contracted with Energy World.
It also consists of a fixed floating LNG facility being developed with Flex LNG and Samsung Heavy Industries.
InterOil and Pacific LNG intend to complete negotiations and execute binding agreements with Noble later this year.

Noble is a subsidiary of Noble Group, that manages the global supply chain of agricultural and energy products, metals and minerals.

Original Article

LNG Project – Papua New Guinea – PART I

Ongoing Campaign Effort

last update: Apr 14, 2011

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Proposed LNG liquefaction and Storage Facility

Description

Liquified Natural Gas (LNG) is natural gas that has been chilled to liquid form, reducing it to one-six-hundredth of its original volume for transportation by ship to destinations not connected by pipeline.

The PNG LNG project aims to exploit gas resources of the PNG Southern Highlands and sell the resulting LNG (Liquified Natural Gas) on the open market, particularly to Asia. This will be the largest industrial/development project in PNG’s history – it is projected to completely transform the PNG economy. It is one of the largest, if not the largest, development project in the Pacific region, excluding Australia. The official economic impact survey commissioned by the project sponsors claims that it will double the size of the PNG’s Gross Domestic Product.

The project will draw on the gas resources of the Hides, Angore, Juha, Gobe, Moran and Utubu fields. It is expected to have a life-cycle of 30 years with production beginning in 2013. The US$15 billion project involves construction of:

  • A gas pipeline running onshore from Juha to Hides, then to the coast near Kopi, then offshore to the LNG plant site.
  • New onshore production facilities in the highlands, including a production facility at Juha and a conditioning plant at Hides where the condensate from the gas will be collected and transported by pipeline to Kutubu.
  • A LNG processing and liquefaction plant near Port Moresby, plus a nearby export jetty and numerous marine offloading facilities.

Full construction in planned to commence early 2010 and first LNG sales are due early 2014. Long-term supplies have been secured to CPC Corporation in Taiwan, Osaka Gas Limited Company, Tokyo Electric Power Company Limited, and Unipec Asia Company Limited, a subsidiary of China Petroleum and Chemical Corporation. The project will have a capacity to produce 6.3 million metric tons of the fuel a year.

Current Status (Jun 10, 2010)

The final deal between the project sponsors and the PNG government was signed on 8 December 2009, the day of the Final Investment Deadline (FID). After completion of the financing arrangements in March 2010 the project moved into a full execution phase. The overall PNG LNG scheme is now at an early stage of a four-year construction period. At the current time design, pre-mobilisation and early site works are underway.

Approximately 60,000 landowners are estimated to be directly affected by the project. PNG law mandates that all investment deals include benefit sharing agreements between landowners, the government and the company. One week before the FID, hardly any landowner groups had signed benefit sharing agreements.

Brief History

On December 15, 2009 the Italian export credit agency, SACE agreed to cover 900 million Euro for contracts to Saipem and Nuovo Pignone, which are financed by Banca Intesa and Unicredit. Thus SACE is financing the project through the project finance component.

On December 15, 2009, The Japan Bank for International Cooperation (JBIC) signed a loan agreement in the aggregate amount of up to 1.8 billion US dollars to be implemented in Papua New Guinea (PNG) with its project company, Papua New Guinea Liquefied Natural Gas Global Company LDC. The loan, provided in project financing is co-financed with a commercial bank syndicate (including Sumitomo Mitsui Banking Corporation, Mizuho Corporate Bank, Ltd. and The Bank of Tokyo-Mitsubishi UFJ, Ltd.) and overseas export credit agencies (including The Export-Import Bank of the United States, The Export-Import Bank of China, SACE S.P.A. in Italy, Export Finance and Insurance Corporation in Australia) and Nippon Export and Investment Insurance (NEXI).

On December 8, 2009, the Australian goverment agreed with a $US500 million loan. The loan is to be provided to the project sponsors through Australia’s Export Finance and Insurance Corporation (EFIC).

On December 8, 2009, the final deal between the project sponsors and the PNG government was signed, the day of the Final Investment Deadline (FID).

On December 4, 2009 the U.S. Ex-Im Bank’s approved the project and the provision of $US3 billion in financing subsidies to Exxon. Read more…

Companies Involved

companies

ABBprofile

BAM Clough Joint Venture

D’appolonia

Esso Highlands Limited

ExxonMobilprofile

Mineral Resources Development Corporation

Oil Search

Petromin

Santos

The project has four major sponsors: ExxonMobil through its subsidiary Esso Highlands (33.2%); the Australian companies Oil Search (29%) and Santos (13.5%); and, the combined s take of PNG state corporation Petromin Holdings Ltd (0.2%) and the Minerals Resources Development Corporation (2.8%).The final deal between the project sponsors and the PNG government was signed on 8 December 2009, the day of the Final Investment Deadline (FID).

In June 2009 Esso Highlands Ltd (a subsidiary of Exxon Mobil Corporation) awared the Eos Joint Venture (an unincorporated joint venture comprising WorleyParsons and Kellogg Brown & Root) an agreement covering Project Services for the PNG LNG Project. The agreement commenced in March 2009 and extends to the end of 2014. Read more.

The banks consultant, D´Appolonia, an Italian engineering consulting company, served as the Independent Environmental and Social Consultant (“IESC”) to the lenders.

Part II

InterOil Executes Agreement With Samsung Heavy Industries and FLEX LNG to Construct a 2 mtpa Floating LNG Vessel

SINGAPORE and HOUSTON, April 11, 2011 /PRNewswire/ — InterOil Corporation (NYSE: IOC) (POMSoX: IOC) today announced that InterOil and Pacific LNG Operations Ltd., have executed agreements, conditional upon Flex shareholder approval and final FID, with Samsung Heavy Industries and FLEX LNG Ltd. (Oslo:FLNG) related to the construction and operation of a 2 million tonne per annum (mtpa) floating liquefied natural gas (LNG) processing vessel (FLNG).  The FLNG project is intended to integrate with and augment proposed infrastructure to liquefy natural gas from the onshore Elk and Antelope gas fields in the Gulf Province of Papua New Guinea pursuant to preliminary arrangements with Energy World Corporation and to link with InterOil’s proposed condensate stripping plant (CSP) being pursued in joint venture with the Mitsui Group and to accelerate the intended monetization of the Elk and Antelope fields. Commencement of the FLNG vessel’s operations is targeted for mid 2014.

FLEX LNG has informed InterOil that it has already completed the generic Front-End Engineering and Design (FEED) in 2009.  The project specific FEED is targeted to start in May 2011, with all parties working towards reaching a final investment decision (FID) before the end of 2011.  The agreements represent a continuation of the over 12 month collaboration between Samsung Heavy Industries, FLEX LNG, InterOil, Pacific LNG and Liquid Niugini Gas Ltd. (LNGL), InterOil’s joint venture LNG project company with Pacific LNG, to work together to develop the first floating facility to produce LNG.

FLEX LNG and Samsung Heavy Industries will be responsible for the design, engineering, construction and commissioning of the FLNG vessel. FLEX LNG will also be joint operator of the FLNG vessel together with LNGL.  Construction of the FLNG unit will be fully financed by FLEX LNG and Samsung Heavy Industries.

The FLNG vessel is expected to be moored alongside the proposed jetty located in the Gulf Province, which will be shared with InterOil’s proposed land-based LNG facilities, and have a production capacity of up to 2 million tons of LNG per annum and to process an estimated 2.25 trillion cubic feet of gas over a firm 25-year period.  FLEX LNG will receive 14.5% of the revenue, less agreed deductions and premiums, from the sale of LNG from the FLNG vessel for an initial 15-year period.  Thereafter, for the next 5 years FLEX LNG will receive 12.5% of the revenue and 10% of the revenue for the last 5-year period.  During the 25 year term of the contract, LNGL will become a part owner of the FLNG vessel.

As a part of the arrangements, InterOil and Pacific LNG will receive options, exercisable no later than 15 days after Flex LNG shareholder approval of this equity transaction, to acquire 11,315,080 common shares of FLEX LNG at an average strike price of 4.5909 NOK.  This is approximately a 12% premium to the average FLEX LNG share price during October 2010 when an initial non-binding agreement was executed between FLEX LNG, InterOil and Pacific LNG.

Additionally, upon the project reaching FID, InterOil and Pacific LNG will receive FLEX LNG shares at par value equivalent to 5% of FLEX LNG.  An additional amount of shares equalling up to 15% ownership in FLEX LNG may be issued to InterOil and Pacific LNG for $0.01 per share in three 5% tranches during the period from FID until 9 months after FID.

The agreements signed with InterOil, Pacific LNG, LNGL and Samsung Heavy Industries are all conditional upon FLEX LNG’s shareholders approving the proposed equity transaction with InterOil and Pacific LNG and achieving a positive project FID.  Such approval is targeted for April/May 2011 and FID by the end of 2011.

Commenting on the agreements, the Chairman of InterOil, Phil Mulacek stated: “InterOil is proud to be partners with Samsung Heavy Industries, FLEX LNG, and Pacific LNG in a proposed project utilizing a FLNG vessel to accelerate the commercialization of our natural gas resources in PNG.  The confidence of Samsung, the largest Korean conglomerate, to be the undisputed leader in FLNG, with a full completion guarantee, solidified our participation.  All stakeholders benefit from higher utilization of the core infrastructure and high quality gas assets required for the project.  The additional time required to increase upstream capacity and integrate the proposed marine facility to accommodate the FLNG vessel is warranted by the increased scale of the entire project and the incorporation of additional respected industry partners.  In less than one year, we have negotiated agreements, contingent on FID, to construct facilities for the processing and sale of 5 mtpa of LNG (4.5 Tcf of natural gas) in addition to our expanded CSP project.”

( Original Article )

prnewswire.com

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