png lng project progress, page-4

On Friday, 25 November,2011, press statements were released concerning a 1mtpa LNG HOA off-take agreement Interoil has signed with Gunvor. For EWC shareholders, I believe that the most relevant sections of these release (one a press release, one by Raymond James) refer to fact that PNG’s PM fully supports the current LNG plans by Interoil, with EWC building/operating 3mtpa modular LNG trains (see the articles below). Earlier today the Post Courier (PNG newspaper) has written a comment which provides even more detail in respect of PNG’s PM endorsement of Interoil’s Gulf LNG project. (see the comments directly below). If all this holds true, then EWC’s project (3mtpa LNG modular plant) is and remains and integral part of Interoil’s Gulf LNG project with FIDs in the near future.



Post Courier online 28 November 2011

Interoil commits to $US 15b LNG project

INTEROIL last Friday signed a $US15 billion non-binding document with one of the world’s major independent commodity oil trading companies – Gunvor to develop the nation’s second largest LNG project.
A heads of agreement was signed by InterOil’s founding directors Phil Mulacek and Christian Vinson with Gunvor executives led by Luc Speeleveld at the Parliament House last Friday.
Prime Minister Peter O’Neill was also part of the signing ceremony at his Parliament conference room.
Mr O’Neill said that the Government was pleased to witness yet another positive event to signal InterOil Corporation’s seriousness and sincerity to move forward towards delivering a world class PNG project on time.
“I congratulate InterOil’s founding directors Phil Mulacek and Christian Vinson, their InterOil, Liquid Niugini and Pacific LNG for securing this LNG off-take agreement,” he said. This Government fully supports InterOil Corporation’s efforts to develop the nation’s second LNG project.
“The State is a partner in this project by virtue of its obligation to acquire up to 22.5 per cent equity as stipulated under the Oil and Gas Act. By fully supporting the interOil project, and their re-scoped development plans and schedules, this Government is clearly signaling to oil and gas industry stakeholders that any attempts to undermine and obstruct the progress of the second LNG project will not be tolerated,” Mr O’Neill reiterated.
“This Government fully supports InterOil Corporation’s decision to develop the LNG project, production and export facilities in Gulf Province. The project will be a much needed economic and social boost for development-starved Gulf Province.
“The Government will move swiftly in the coming days to begin the process of facilitating necessary amendments to parts of the Project Agreement dealing with the relocation of Gulf instead of piping gas and condensates to facilities located at Napanapa in Port Moresby as initially envisaged.’’
He said the Government would also amend Project Agreement provisions to validate InterOil’s re-scoped plan.





InterOil and Gunvor Sign Heads of Agreement for LNG Supply
P ORT MORESBY, Papua New Guinea and HOUSTON, Nov. 25, 2011 /PRNewswire/ -- InterOil Corporation IOC ("InterOil") and Pacific LNG Operations Ltd. ("Pacific LNG") announced the signing of a Heads of Agreement (HOA) with Gunvor Singapore Pte. Ltd., for the supply of one million tonnes per annum (mtpa) of liquefied natural gas (LNG 0.00%, news) from the Gulf LNG Project in Papua New Guinea. The signing occurred in Port Moresby and was witnessed and supported by Prime Minister Peter O'Neill, the Gulf Governor Havila Kavo, and other cabinet Ministers.

The Prime Minister witnessed the signing of the HOA and acknowledged that the PNG Government supports the phased LNG development of the Gulf LNG project and the financial structure to ensure LNG revenue for all stakeholders by 2014 to early 2015.
Mr. Philip Fjeld, CEO of FLEX LNG LTD, was present to assure the PNG government that FLEX LNG and Samsung can be ready for FID by Year end 2011, in line with the PNG government requests.
The Gulf LNG Project in Papua New Guinea (PNG 0.00%, news) comprises the Elk and Antelope gas fields and the planned liquefaction and associated facilities in the Gulf Province of PNG to be developed by Liquid Niugini Gas Ltd., InterOil and Pacific LNG's joint-venture project company.
The HOA, while not binding, sets out the basis upon which the parties intend to negotiate and document terms for the purchase and sale of one mtpa of LNG, for a period of 15 years commencing in 2015, to be supplied by the proposed Gulf LNG Project in PNG. InterOil and Pacific LNG are striving to complete negotiations and execute a binding Sales and Purchase Agreement (SPA 0.00%, news) with Gunvor by the second quarter of 2012.
InterOil Chief Executive Officer Phil Mulacek commented, "We are pleased to have executed an HOA with Gunvor, for long-term LNG off-take from our Gulf LNG Project in Papua New Guinea. InterOil is proud to work with Gunvor, one of the largest energy commodity movers in the world. With 2.3 mtpa now committed under HOA's, InterOil has preliminary LNG offtake arrangements for more than 50% of its start-up LNG volumes. We expect the HOAs to facilitate remaining infrastructure financing arrangements with binding SPA, driving robust debt coverage for the Gulf LNG project."
Liquid Niugini Gas V.P. LNG, Conrad Kerr, commented, "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. We are interested in value optimization for our LNG, and a long-term relationship with Gunvor enhances this strategy."




Raymond James "IOC: Post-Thanksgiving Surprise: A Second LNG Offtake Agreement. Prime Minister O'Neill, who was at the signing, provided what amounts to a public endorsement of InterOil's LNG development. Outperform"


Raymond James Equity Research
InterOil Corp. - Outperform 2;
Companies Mentioned - IOC,XOM

IOC: Post-Thanksgiving Surprise: A Second LNG Offtake Agreement

* Here is something for IOC shareholders to be thankful for: InterOil has announced a 15-year LNG offtake agreement for 1.0 million tons per year with Gunvor, a company headquartered in Geneva that is one of the world's largest energy trading firms. This is InterOil's second offtake agreement. The first, covering the same annual volume for a 10-year period, was signed with Singapore's Noble Group in early August. Both agreements are currently non-binding heads of agreements that are expected to convert into binding contracts after the final investment decision (FID).

* The volume of 1.0 million tons per year covers 20% of InterOil's initial liquefaction capacity (3 million tons at the onshore plant and 2 million tons at the floating plant). As is typical of such deal announcements, pricing was not specified, but InterOil's management has consistently noted that the default market price for PNG - set by ExxonMobil's (XOM/$74.58/Market Perform) LNG project - is a "slope" of 14.85, meaning 14.85% of the benchmark Japanese Crude Cocktail oil price.

* While the offtake agreement itself is a positive incremental datapoint, we also take note of the supportive comments from PNG's prime minister that accompanied the offtake announcement. Prime Minister O'Neill, who was at the signing, provided what amounts to a public endorsement of InterOil's LNG development. While we have never had any doubt that the government wants this project to succeed (given the public benefits in terms of skilled jobs, foreign investment, and tax revenue), we understand that some investors felt apprehensive when in September the government instructed InterOil to bring an "internationally recognized" LNG operator into the project. In accordance with these instructions, InterOil continues to be in talks with prospective partners; for details, see our company brief from September 30, "IOC: It`s Official: Major Strategic Partner on the Way - Get Ready For Selldown".