Oil company vows it will live up to agreement
THE InterOil Corporation says it is still committed to delivering a world-class Gulf LNG project in compliance with the 2009 agreement with the government, The National reports.
But this assurance did not help its performance on the New York Stock Exchange as it got a hammering and shed 24% of its share value to trade at US$45.75 (down from an average US$56).
The NYSE recorded the big hit on the stocks as an "unusual stock move" which followed Petroleum Minister William Duma's announcement that the national executive council had decided to dump the project as InterOil had deviated from its original plan to build a world-class LNG plant alongside its NapaNapa oil refinery near Port Moresby.
InterOil chairman Phil Mulacek said the company had this week discussed with Duma the government's concern over the project as highlighted in the media.
"We continue to be working together on the clarification of issues for the project execution, raised by the minister,'' he said in a statement.
"Recent meetings this week show support for the InterOil LNG project in the Gulf by the minister, prime minister and Gulf ministers.
"Further clarification was added for additional support for LNG operations, which all parties are working on."
The government this week decided to cancel the InterOil-proposed Gulf LNG project because the company had deviated from the original project agreement.
Duma said InterOil had instead proposed a "small-scale fragmented" Gulf project to be developed by companies not recognised as LNG operators.
He said none of the companies were experienced in operating a world-class LNG plant that InterOil was contracted to do.
Yesterday, InterOil said in the past 15 years it had been in operation in PNG, it had worked hard to develop a lasting and constructive relationship with the people and the government.
A company statement said: "It is unfortunate that such assertions were being made by the
minister on the basis of preliminary interpretations of complex and permissive contractual definitions while the project continues to develop.
"As a company with a long history and all of its operations and business in PNG, InterOil hopes that these actions, together with the recent period of substantial change in PNG's national government, do not undermine PNG's status as a favourable country for foreign investment and international business.
"InterOil is developing its LNG project in compliance with its project agreement with the PNG government to develop a world-class LNG project of the size provided for, of international scale and quality, and using internationally recognised technology.
"The company believes that reason and governance in the interests of the people of PNG will prevail, as has always been evident in its past dealings with the PNG government," the statement said.
Duma said earlier this week that while the agreement stated InterOil and its partners would build a world class LNG plant of international scale and quality, it had instead been announcing, presenting and promoting a different project without seeking prior formal state approval.
Duma, however, assured the developers that the government would continue to support the second LNG project if it complied with the original agreement.
InterOil said it was developing a vertically integrated energy business whose primary focus was PNG and the surrounding region.
Its assets include petroleum licences covering about 3.9 million acres, an oil refinery, and retail and commercial distribution facilities, all located in PNG.
In addition, InterOil is a shareholder in a joint venture established to construct an LNG plant in PNG.