PERTH Nov 16 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
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
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.