RPT-UPDATE 1-Papua New Guinea approves InterOil LNG project, raises stake to 50 pct
PERTH Nov 16 (Reuters) - InterOil Corp said the Papua New Guinea government will take a 50 percent stake in the company's $6 billion liquefied natural gas plant, which received approval from the Pacific island nation's cabinet on Friday after months of negotiations.
Papua New Guinea will acquire a 27.5 percent stake in the Gulf project in addition to the 22.5 percent it is entitled to under the Oil & Gas Act, InterOil said.
Shares of InterOil were up about 6 percent in trading before the bell on the New York Stock Exchange.
PNG's energy department threatened in May to cancel the project, saying that InterOil had deviated from the original agreement. The oil producer, refiner and petroleum retailer has been holding talks with the government to iron out project specifications.
The government go-ahead means the company can proceed to the first stage of the Gulf LNG project, which is expected to come on line in 2015, InterOil said.
InterOil said on Thursday it was now targeting initial LNG plant capacity of 3.8 million tonnes per annum (mtpa), rather than the 8-10 mtpa originally planned.
"A smaller plant has always been InterOil's preference, given the accelerated timeline, comparative ease of financing, and the more competitive bids from potential partners," Raymond James analyst Pavel Molchanov said in a note.
Major oil companies, national oil companies and Asian utilities have expressed interest in the project, InterOil has said.
InterOil, which primarily operates in Papua New Guinea, is developing the project with energy investor Pacific LNG in a joint venture called Liquid Niugini Gas Ltd.
A spokeswoman for Prime Minister Peter O'Neill had said earlier on Friday that the government was seeking a 50 percent stake in InterOil's project.
InterOil shares closed at $61.42 on Thursday.