InterOil Corporation announced that InterOil and Liquid Niugini Gas Ltd., its joint-venture liquefied natural gas project company with Pacific LNG Operations Ltd., have signed a Project Funding and Construction Agreement (PFCA) and a Shareholder Agreement with Energy World Corporation Ltd. governing the parameters in respect of the development, construction, financing and operation of a planned three million tonne per annum (mtpa) land-based modular LNG plant in the Gulf Province (PNG).
The LNG plant is intended to be developed in two phases, 2 mtpa followed immediately by a 1 mtpa expansion. The contractual terms relating to the 3 mtpa plant have been defined with the execution of the two agreements. The agreements follow InterOil’s September 2010 announcement of execution of a heads of agreement with EWC governing the proposed LNG plant.
The LNG plant is expected to process an estimated 2.25 trillion cubic feet (Tcf) of natural gas over 15 years. In return for its commitment to fully fund the development and construction of the LNG plant, the agreements provide that EWC will be entitled to a fee of 14.5% of the proceeds from the sale of LNG from the plant, less agreed deductions and financing costs, subject to adjustments based on timing and execution and that EWC will also own a 14.5% interest in the operating company of the LNG Plant.
The LNG project with EWC for the development of the modular LNG plant is designed to link with InterOil’s proposed condensate stripping plant (CSP) being pursued in joint venture with Mitsui Group and to accelerate the intended monetization of the Elk and Antelope fields. The agreements with EWC provide a framework for the possible expansion of the initial LNG plant’s capacity to up to 8 mtpa of LNG.
The PFCA and Shareholder Agreement with EWC are conditional on reaching final investment decision (FID) to proceed with the LNG plant no later than December 31, 2011. Between now and then, the parties to the agreements expect to complete arrangements for plant design, financing and government approvals.
As previously disclosed, the current LNG project schedule is aiming for the FID to occur simultaneously for each of the proposed LNG plant and CSP by June 30, 2011, with a proposed combined plant start-up approximately 30 months later.
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Source: InterOil, February 3, 2011;