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 JVOA replaces the preliminary joint venture works agreement unveiled in April 2010.
InterOil and Mitsui also executed an Option Deed. After reaching final investment decision on the CSP, Mitsui has options to acquire interests of up to a 5% in the Elk and Antelope fields and in the liquefied natural gas (LNG) Project on equal terms, yet to be determined, to those agreed with a future industry partner, as follows:
After mechanical completion of the CSP, Mitsui has a right to convert its contributed investment in the CSP into a 2.5% interest in the Elk and Antelope fields and the proposed LNG Plant.
Mitsui also has conditional rights under a separate call option to purchase an additional 2.5% interest in the Elk and Antelope fields and the proposed LNG Plant.
Under the JVOA, InterOil and Mitsui will each have a 50% ownership stake, before the State of Papua New Guinea’s statutory right to acquire up to 22.5% in the CSP. An InterOil subsidiary is the operator under the joint venture.
InterOil expects that the CSP will be designed to process approximately 400 million standard cubic feet per day (mmscf/day) of wellhead gas with an anticipated yield of approximately 9,000 barrels (bbls) of condensate per day.
Dry gas may be reinjected into the reservoir for storage depending on the timing of the development of the proposed LNG Plant. The condensate is expected to be barged to the InterOil refinery in Port Moresby for processing and sale.
The wells and condensate transport from the CSP (located approximately 30km southwest of the fields adjacent to the Purari River) will be the responsibility of the owners of the Elk and Antelope fields, including InterOil and its upstream partners.
The capital cost for the CSP is currently estimated at $550m, with approximately $32m of this being expended for front end engineering design. Mitsui will be responsible for arranging or providing financing for the capital costs of the plant.
The CSP facilities are projected to be operational no later than mid-2013. In the event that a positive Final Investment Decision is not reached or made, InterOil will be required to refund Mitsui’s capital expenditure incurred within a specified period and the option and conversion deeds will be terminated.
Phil Mulacek, CEO of InterOil, said: “Since April, front end engineering and design studies have been ongoing and we have now concluded certain definitive agreements with Mitsui for the CSP and Mitsui’s right to acquire up to 5% in the Elk and Antelope fields and the proposed LNG project.”
