InterOil signs up another buyer

INTEROIL and Pacific LNG Operations have struck a heads of agreement with the Singaporean arm of energy trader Gunvor Group to supply one million tonnes per annum of LNG from their Gulf LNG project in Papua New Guinea.
InterOil signs up another buyer InterOil signs up another buyer InterOil signs up another buyer InterOil signs up another buyer InterOil signs up another buyer

Due to some criticism of the project over past months from PNG's Department of Petroleum and Energy, there have been some fears the government is becoming less supportive of the Gulf LNG project.

However, Prime Minister Peter O'Neill witnessed the signing of the HOA between the two Gulf LNG project partners and Gunvor Singapore.

O'Neill further "acknowledged" that the government supports the phased development of the project and the financial structure to provide LNG revenue for all stakeholders by 2014 to early 2015, according to InterOil.

FLEX LNG chief executive officer Philip Fjeld also attended the ceremony.

InterOil said he provided assurance to O'Neill that Flex and its partner Samsung will be ready for the end of year final investment decision on the floating LNG component of the Gulf LNG project, "in line with PNG government requests".

Under the non-binding HOA with Gunvor, the Gulf LNG project is expected to supply LNG for 15 years starting in 2015 and the target for a binding sales agreement is the June quarter of 2012.

The first HOA for the project was struck with Noble Clean Fuels in August, and covered 1mtpa of LNG for 10 years starting from 2014.

"With 2.3 mtpa now committed under HOAs, InterOil has preliminary LNG offtake arrangements for more than 50% of its start-up LNG volumes," InterOil chief executive officer Phil Mulacek said.

"We expect the HOAs to facilitate remaining infrastructure financing arrangements with [a] binding sales and purchase agreement, driving robust debt coverage for the Gulf LNG project."

Pacific LNG president Henry Aldorf said the offtake arrangements were a strong endorsement of the project's modular and fixed floating LNG execution strategy.

Another project partner, Liquid Niugini Gas, commented on Gunvor's move into LNG trading over recent years.

"Gunvor has become an established player in the LNG industry through its success in acquiring, and moving large amounts of short term LNG cargoes in the last few years," Liquid Niugini vice president Conrad Kerr said.

"It was only a matter of time until they used their extensive global energy physical commodity platform to move into long term LNG."

The Interoil-led Gulf LNG project is based on an onshore modular LNG plant in Gulf province along with an offshore floating LNG facility, for a total of 5mtpa in 2014. There is also an option to ramp up to 8mtpa through 2015 and 2016.

Gas will be supplied from InterOil's Elk-Antelope field in Gulf province, but further exploration in its licence areas is underway with the Triceratops-2 well expected to spud in December.

While InterOil is the project operator, Pacific LNG owns about 20% of the Elk-Antelope field, 47.5% of Liquid Niugini and is a big shareholder of InterOil.

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