In­teroil chooses To­tal SA for sec­ond LNG project

In­teroil Cor­po­ra­tion has an­nounced it is team­ing up with France’s To­tal S.A. to de­velop Pa­pua New Guinea’s sec­ond LNG gas project at the Elk and An­te­lope fields in Gulf Prov­ince. How will the new project fit into PNG’S ex­ist­ing LNG land­scape?

Business Advantage Papua New Guinea - - Petroleum & Gas -

In De­cem­ber 2013, In­teroil fi­nally se­lected a devel­op­ment part­ner for its Elk and An­te­lope gas fields in PNG’S Gulf Prov­ince. French ma­jor To­tal SA will pay up to US$3.6 bil­lion (K9.01 bil­lion) for a 61.3% stake in the fields.

The fi­nal price will de­pend on the ex­tent of the re­serves, which will be known af­ter a US$325 mil­lion (K816 mil­lion) drilling pro­gram. A com­pany state­ment said the drilling cam­paign will take be­tween 12 and 15 months.

The France-based con­glom­er­ate is the fifth-largest pub­liclytraded oil and gas com­pany in the world. Its deal with In­teroil rep­re­sents its first en­try into the PNG petroleum devel­op­ment in­dus­try.

Oil Search Limited, one of the key play­ers in­volved with PNG’S ex­ist­ing LNG project, the Exxonmo­bil-led PNG LNG project, has also joined the ven­ture, ac­quir­ing 23% of Elk and An­te­lope fields from Pac LNG in March 2014.

Oil Search man­ag­ing direc­tor Peter Bot­ten told in­vestors he paid be­yond the ‘re­source value’ of Pac LNG’S stake to have the abil­ity to lever­age more value.

‘With us sit­ting where we’re at in both joint ven­tures, and hav­ing a range of other gas re­sources, we’re uniquely sit­u­ated to drive the fu­ture of LNG in PNG,’ he said.

In­te­gra­tion with the PNG LNG project?

‘The Elk/an­te­lope field is the largest un­de­vel­oped gas field in the re­gion and it would cer­tainly be ad­van­ta­geous for Oil Search to have a sig­nif­i­cant say in the devel­op­ment of that field,’ David Len­nox, se­nior an­a­lyst with stock­bro­kers Fat Prophets, tells

Busi­ness Ad­van­tage.

‘They have a sig­nif­i­cant in­ter­est in the PNG LNG project that will soon be com­ing into pro­duc­tion and they will be want­ing to shore up the sup­ply of prod­uct into those [two] trains, and have the po­ten­tial abil­ity to per­haps build an ad­di­tional train on site with ex­tra gas that could be sup­plied from Elk/an­te­lope.’

‘It would be a lit­tle dif­fi­cult at this point in time to pre­dict who will have the big­gest say when it comes to de­vel­op­ing Elk/ An­te­lope. It’s not at that stage. It’s got to get there yet and un­til it is ac­tu­ally proven to be com­mer­cial, ev­ery­one’s go­ing to re­main pretty quiet.’'

Petro­min Hold­ings chair­man Sir Brown Bai wel­comed the To­tal deal. Petro­min is the state nom­i­nee for the Elk/an­te­lope project, although Prime Min­is­ter O’neill flagged in early 2013 that the or­gan­i­sa­tion may be re-named Ku­mul Petroleum un­der a ma­jor re­or­gan­i­sa­tion of State-held as­sets.

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