SECOND GAS PROJECT APPROVED IN PAPUA NEW

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GUINEA
InterOil Corp.plans $6 billion operation in Gulf province

PORT MORESBY, Papua New Guinea (The National, Dec. 11, 2009) – In Papua New Guinea, the National Executive Council (NEC) has approved the project agreement for the second liquefied natural gas (LNG) project being developed by InterOil Corp.

Prime Minister Sir Michael Somare yesterday announced the Cabinet decision, two days after the ExxonMobil-led 42 billion kina [US$15.5 billion] Papua New Guinea Liquefied Natural Gas (PNG LNG) project was approved to proceed with production of about 6.6 million tonnes of LNG a year.

The NEC approval means InterOil can now embark on capital raising drive and proceed with expenditure needed to further the LNG project at its Elk/Antelope fields in Wabo, Gulf province.

It has already applied for petroleum retention licence (PRL), a first step to getting the petroleum development licence (PDL).

InterOil said the LNG project targeted a 17 billion kina [US$6.3 billion] two train LNG facility, with each train capable of producing about four million tonnes of LNG per year.

Sir Michael said: "The InterOil led project will contribute significantly to the economic prosperity of the Gulf province and PNG in general.

"I am very pleased that Cabinet has given InterOil and Petromin the green light to develop a second LNG project for the country after two years of detailed negotiations between the State and the project developer.

"The project agreement offers the same fiscal and regulatory benefits to that approved for the PNG LNG project.

"This is a significant milestone for Papua New Guinea to have two LNG projects that will gainfully add value to the development of country and its people," he said, adding the country would be transformed even further with the prospects of a third LNG project, led by Talisman Ltd.

"I commend everyone that has worked tirelessly to bring to completion this project agreement," Sir Michael said.

Petromin PNG Holdings Ltd, the State’s nominee to participate in the project for the 22.5 percent (2 percent for landowners) State equity, has commended the Government for making strategic investment decisions for the benefit of the country this week.

Managing director Joshua Kalinoe said the approval meant Petromin and InterOil would now start the project implementation process.

"The Government has taken a very mature and strategic approach in handling the two projects which set the foundation for a positive development outcome for the future," Mr. Kalinoe said.

Petromin and InterOil would continue the drilling programme to determine the full extent of the field which has indicated presence of liquids, including oil.

Last March 2 at Antelope-1 InterOil flared a world record 382 million cubic feet of gas per day (mmcfpd) of gas and on Dec 1 flared 705 mmcfpd claiming another world record.

It is developing its proposed Antelope-3.

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