InterOil Corporation has extended the dates by which certain conditions are to be met and Final Investment Decisions made in LNG project agreements with Mitsui and Energy World Corp, until March 31, 2012.
The terms of the Project Funding and Construction Agreement and Shareholder Agreement entered into in February 2011 with Energy World Corporation Ltd. governing the parameters in respect of the development, construction, financing and operation of a planned three million tonne per annum land-based LNG plant in the Gulf Province of Papua New Guinea have been amended so that the date by which conditions are to be met and FID reached has been extended untilMarch 31, 2012.
The Joint Venture Operating Agreement for the Company's proposed Condensate Stripping Plant with Mitsui & Co., Ltd. and associated agreements, have also been amended so that the time allowed for FID has been extended until March 31, 2012. The JVOA sets out the rights and obligations of the participants of the joint venture to develop a CSP at InterOil's Elk and Antelope field site in Gulf Province, Papua New Guinea.
The agreement with Samsung Heavy Industries and FLEX LNG Ltd. related to the construction and operation of a 2 million tonne per annum floating liquefied natural gas processing vessel which contemplated achieving FID by year end has lapsed. InterOil and FLEX are continuing negotiation with a view towards updating the agreement and working toward FID during the first quarter of 2012. Since entering the original agreement in April 2011, project specific FEED for the FLNG vessel has been completed, and both Samsung Heavy Industries and FLEX LNG are ready to proceed to enter the execution phase of the LNG project. The Framework Agreement has expired, but the Parties will continue to work together with the aim of achieving a successful outcome for all stakeholders in the project, including the State of Papua New Guinea and the Gulf Province.
The Board of Directors of InterOil is ready to make a Final Investment Decision to proceed with its LNG project in the Gulf Province, and is committed to working together with the PNG Government to move the project forward. Management believes that the resource estimates certified by GLJ Petroleum Consultants Ltd. provide sufficient natural gas volume to underpin the project. Design concepts, including alternatives arising from a successful asset sale, have matured to the point where we have received bids for major components and narrowed the range of estimated capital costs of the project. The financing requirements of the project are expected to be underpinned by the strong demand for LNG offtake, evidenced by the heads of agreement executed to date. Stress tests against key downside sensitivities such as projected commodity pricing, cost overruns and start-up delays continue to support development of the project.