GAIL managing director BC Tripathi told reporters on the sidelines of the sixth Asia Gas Partnership Summit in New Delhi that the company was examining the possibility of having a stake in the project.

"We are in discussions with InterOil ... it is at a preliminary stage and I cannot say what stake GAIL can get," India's Economic Times newspaper quoted him as saying.

"A lot will depend on due diligence."

With the country's capacity to regasify LNG expected to grow by 7 million tonnes per annum to 20 million tonnes per annum by 2011-12, India's interest in LNG projects is hardly surprising.

"The LNG infrastructure in the country is being expanded. The capacity of Dahej terminal has been doubled last year. The work at Kochi LNG terminal is underway. Dabhol terminal will be commissioned soon," the Hindu newspaper reported Minister for Petroleum and Natural Gas Murli Deora as saying.

He added the country's gas transportation network was also set to grow.

Liquid Niugini is 52.5% owned by InterOil and 47.5% held by Pacific LNG, with the project aiming to build a 6-9 million tonne per annum LNG plant adjacent to InterOil's oil refinery at Napa Napa.