Tuesday, November 03, 2009

InterOil’s LNG project - early benefits and revenue transparency

PORT MORESBY, Tuesday November 3, 2009: INTEROIL Corporation believes that its proposed LNG project would provide attractive revenue streams to Papua New Guinea before 2014.
InterOil discussed the nature of these revenue streams in the company’s presentation at the PNG Chamber of Mines and Petroleum conference held at the Crown Plaza Hotel in Port Moresby, Papua New Guinea between October 27 and 30.
In the presentation, InterOil described its upstream oil and gas production business segment and its separate proposed midstream LNG tolling plant business segment which form a non-integrated project structure.
The Company believes that such a structure, with its clear lines of demarcation between upstream and midstream segments, provides revenues to the country on a transparent basis while also potentially providing those revenues earlier to PNG’s various levels of government and to landowners.

“InterOil is aiming to bring on stream a liquids stripping plant, to be located in Gulf Province, on stream in late 2011/2012 while the LNG plant is still being built,” the company presentation by CEO Phil Mulacek said.
 “The plant will extract the liquid condensate from the gas, reinject the gas back into the reservoir, and transport the liquids to its refinery or for sale in the open market.
“The advantage for landowners, provincial governments and the PNG state is taxes and royalties would start flowing earlier into their respective coffers,” Mulacek said.
“All upstream stakeholders benefit from the early condensate/oil production through direct 20.5% government ownership and 2% landowner royalty payments.
“Additional revenue is generated by the PNG government through the 30% company tax rate.

“When the LNG plant begins its operations in late 2014/2015, all upstream stakeholders will benefit from increased condensate production, natural gas production and associated profits taxes as it occurs due to InterOil’s non-integrated project structure.
“Additionally, LNG plant stakeholders would benefit from a separate stream of revenue and profit tax from the midstream LNG plant.
“The separate revenue streams provide increased transparency when compared with an integrated project structure.
“Based on current forecasts of production and commodity prices, 94% of the total revenues from InterOil’s project to the PNG government will be derived from the production of oil and gas during the first ten years. 

“Production from the Elk/Antelope field provides revenue security to PNG and early cash flows for the State, provincial governments and landowners potentially beginning in 2011/2012 from early liquids production.
“The InterOil LNG project would provide direct and indirect benefits to PNG. 
“The InterOil LNG project is not in direct competition with the PNG LNG project but rather adds additional revenue security to PNG.
“Delay of the LNG Project Agreement will risk the revenue diversity to PNG citizens and the momentum for a stronger LNG industry in Papua New Guinea,” Mulacek said.

 For further information please contact
 Susuve Laumaea
Senior Manager (Media Relations)
InterOil Corporation
Ph: (675) 321 7040
Mobile: 675-76845168 or 675-72013870

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