I nterOil Corporation today announced that InterOil and Liquid Niugini Gas Ltd., its Joint-Venture liquefied natural gas project company with Pacific LNG Operations Ltd., have signed a binding Heads Of Agreement (HOA) with Energy World Corporation Ltd. to construct a two million tonne per annum (mtpa) land-based LNG plant in the Gulf Province of Papua New Guinea (PNG) .
The Train 1 LNG plant would process an estimated 1.5 trillion cubic feet (Tcf) of natural gas over 15 years with early stage capital expenditure estimates amounting to US$455 per metric tonne of LNG production.
In return for its commitment to fully fund the plant, the HOA provides that EWC is to be entitled to a fee of 14.5% of the proceeds from the sale of LNG from the plant, less agreed deductions, and subject to adjustments based on timing and execution.
The HOA sets out the major terms and conditions which the parties intend to include in the Train 1 Funding and Shareholder’s Agreements, as well as a potential expansion of the plant’s capacity from 2 mtpa to 3 mtpa.
The HOA with EWC for the development of a mid-sized LNG plant is an opportunity to enhance the proposed condensate stripping plant (CSP) being pursued in joint venture with Mitsui and accelerate the intended monetization of the Elk and Antelope resource.
Infrastructure required for the LNG project includes a jetty and breakwater for the LNG loading facility with expansion potential, and approximately 50 mile (80 Km) pipeline from the Elk and Antelope fields to the coast.
The wells and processed natural gas pipeline from the CSP to the coast in the Gulf Province will be the responsibility of the owners of the Elk and Antelope fields, including InterOil and its upstream partners.
Definitive agreements are under negotiation with a view to being finalised by the end of December 2010, assuming completion of engineering and design work, financing and shareholder agreements with EWC, and further regulatory approvals.
The current schedule aims for these LNG facilities to be operational by late-2013, hoped to coincide with the start-up of the proposed CSP joint venture with Mitsui.
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Source: InterOil , September 28, 2010