Petronet eyes Merrill Lynch stake of PNG's second major LNG project

INDIA'S largest liquefied natural gas importer and joint venture Petronet LNG is looking at buying into the PNG LNG rival Liquid Niugini Gas JV through a deal with the latter’s one-third stakeholder Merrill Lynch.
Petronet eyes Merrill Lynch stake of PNG's second major LNG project Petronet eyes Merrill Lynch stake of PNG's second major LNG project Petronet eyes Merrill Lynch stake of PNG's second major LNG project Petronet eyes Merrill Lynch stake of PNG's second major LNG project Petronet eyes Merrill Lynch stake of PNG's second major LNG project

A technical official from Petronet attending the Tenth Papua New Guinea Mining & Petroleum Investment Conference yesterday told PNGIndustryNews.net the negotiations could have the Indian JV buying a stakeholding from Merrill Lynch of around 25%.

Merrill Lynch is subject to a proposed takeover from the Bank of America and last week the Federal Reserve Bank gave the move its blessing, while the investment bank's shareholders will vote on the offer on December 5.

Recently, official sources told the Hindu Business Line that Petronet will make overseas upstream investments with Indian Oil Corporation.

According to the report, Petronet was in talks with three different operators in PNG for five explored blocks that have gas resources and are spread over three different basins.

While the names of the operators were not disclosed, sources said the international companies are from the United States, Australia and Canada.

Negotiations reportedly involve farm-in opportunities with the foreign stakeholders for equity in the projects.

Petronet has an LNG receiving and re-gasification terminal capable of 5 million tonnes per annum at Dahej in the state of Gujarat in western India, and is building a 2.5MMtpa terminal at Kochi in the state of Kerala.

Indian firms GAIL, Indian Oil Corporation and Bharat Petroleum each hold 12.5% of Petronet, while Gaz de France has 10%, the Asian Development bank has 5.2% and financial institutions and small investors have the remaining 32.8%.

Liquid Niugini Gas is one-third owned by InterOil, Merrill Lynch and Clarion Finanz, with the latter holding its interest through subsidiary Pacific LNG.

The $US5-7 billion project is targeting first cargoes in late 2013, early 2014, and the JV would ideally like a two-train plant capable of producing up to 9Mt of gas per annum.

InterOil is currently drilling the Antelope-1 appraisal well in Gulf Province. In early September, the Antelope structure provided the impressive 105 million cubic feet gas flow rate from the company's nearby Elk-4 well.

Should Antelope-1 be a success, InterOil is confident of having enough gas resource from its Elk and Antelope structures to underpin the two trains for Liquid Niugini Gas.

Unlike the ExxonMobil-led PNG LNG joint venture, Liquid Niugini Gas does not have a gas agreement with the PNG government.

However, this could soon change, according to Deputy Prime Minister and Mining Minister Dr Puka Temu, who spoke at the conference's keynote address in the absence of Prime Minister Sir Michael Somare.

"Right now there is a very strong likelihood that PNG is glaring at a second LNG project led by InterOil and partners, and negotiations are going to begin soon after this conference," he said.

The Tenth Papua New Guinea Mining & Petroleum Investment Conference, held at the Hilton Hotel in Sydney, has set a new record with more than 800 delegates to attend for the three days, ending Wednesday.

loader
  • NEW: Digital version of PNG Report magazine - View here
  • Porgera: Barrick-PNG talks go on - Read more
  • Follow the companies investing in the PNG market - Read more