InterOil today announced its choice of TOTAL SA, to develop the second PNG LNG Project in the Gulf Province.
Early this year, the state gave InterOil until December to prove its worth to develop the second LNG project in Gulf. However, the Gulf Provincial Administration called for a new developer.
InterOil has agreed to sell to TOTAL SA a gross of 61.3% interest in Petroleum Retention License 15, which contains the Elk Antelope gas fields, and has also granted total exclusive right to negotiate a farm-in to all its exploration licenses in PNG.
Dignitaries from InterOil, the new developer TOTAL, the Gulf Governor, Havila Kavo, and Minister for Petroleum and Energy, William Duma, gathered at the Airways Hotel in Port Moresby today for the grand announcement.
TOTAL is a French multinational integrated oil and gas company and one of the six "Super major" oil companies in the world. Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to power generation, transportation, refining, petroleum product marketing, and international crude oil and product trading.
Total is also a large-scale chemicals manufacturer and has its head office in the West of Paris.
TOTAL will now develop the Elk and Antelope gas fields in the Baimuru district of the Gulf Province. These reserves are host to the second PNG LNG project.
Early this year, the provincial government called for a new developer because InterOil failed to honour its commitments to the project and further failed to honour the MoA it signed with the state in December 2009 to make a final investment decision by the 24th of June 2013.
Minister for Petroleum and Energy, William Duma, issued a 180 days ultimatum to InterOil to give a detailed account on their position. The Minister expressed confidence in this new investment and offered the provincial administration’s support in the development of the project.
Minister Duma also advocated the national government’s agenda about the development of downstream processing plants and gas powered electricity for rural electrification. He urged all stakeholders to work in unison for the benefit of everyone.
Among agreements include; fixed payments to InterOil of US$613 million on transaction completion which is expected in the first quarter of 2014, and in addition to these fixed amounts, variable payments for amounts in excess of 3.5 trillion cubic feet for the gas resource will depend on certification by two independent certifiers following up to 3 appraisal wells to be drilled in PRL 15.
In addition, TOTAL has agreed to make a payment of US$100 million per trillion cubic feet for volumes over 1 trillion cubic feet for additional resources discovered in PRL 15 from one exploration well.
Any payment is said to be made at the first gas from the proposed Elk Antelope LNG facility. The program and facility is expected to be completed in 2015.