courtesy Interoil Corp.

Papua New Guinea oil company Petromin and InterOil Corp. have agreed a tentative deal in Beijing to let China National Offshore Oil Corp. bid to own part of what is being heraled as the company's first true project for liquified natural gas, or LNG.

The “Heads of” deal signed this week between Chinese Premier Wen Jiabao and Papua New Guinea's Prime Minister Grand Chief Sir Michael brings a national oil company into bidding for accessible gas resources that includes the international oil companies.

The pact lets CNOOC set out terms for financing the first phase of Petromin’s interest and determining what the people of Popua New Guinea’s stake in the gas field and LNG plant will be. Petromin has the right to co-market its stately share of LNG.

“The national petroleum and mining company will hold equity in the gas field and the LNG plant for the benefit of all the people of Papua New Guinea,” a Petromin statement said. Jobs and training were promised, and numerous onshore satellite fields look set to prolong the tiny nation’s hydrocarbon boom.

In March, banks were appointed as advisors, as early engineering progresses ahead of a planned early start to this LNG Project. Papua’s Antelope 1 flared this month and bodes well for a 3.5 million-tonne-a-year LNG plant that will cost $5 billion.

No novices to LNG, in 2010 an investment decision from ExxonMobil is expected for another Papua project, the $10-billion PNG LNG Project and its 960 million standard cubic feet per year from the Kutubu, Gobe, Moran, Hides and Juha gas fields.

Interoil is understood to expect first gas in 2012 and ExxonMobil in 2014.

Tags: CNOOC Limited, InterOil Corporation