Prime Minister witnesses signing of preliminary commitment to for condensate stripping plant joint venture between InterOil and Mitsui

Prime Minister Sir Michael Somare has congratulated InterOil and Mitsui Corporation for entering into a Preliminary Commitment Agreement to develop phase one of the Elk/Antelope LNG project.

Sir Michael said: “With these partnerships that we as a country are establishing with Japan, I will be happy to eventually leave politics with the knowledge that this government has enabled PNG to take positive steps towards a secure and prosperous future.”

Sir Michael made these remarks after a fruitful working visit to Tokyo, Japan, where he also held bilateral talks with his counterpart Prime Minister Yukio Hatoyama, further aligning the economic interests of both countries.

Their discussions included details of international co-operation specifically relating to investment in PNG, the key 50%+ LNG off take from the first PNG LNG project, trading partners, environment and climate change, as well as the benefits of a secure environmentally-friendly LNG supply from the second InterOil LNG project.

Sir Michael witnessed the signing ceremony in Tokyo of the Commitment Agreements between InterOil and Mitsui on Tuesday, March 30, 2010.

InterOil is the upstream operator for the Elk/Antelope LNG project and Mitsui Corporation is one of the leading Japanese investment and trading companies.

This follows the HOA (Heads of Agreement) that was signed in Papua New Guinea, on December 23, 2009, between InterOil and Mitsui, where the PNG Government ensured support to Mitsui.

The Preliminary Commitment Agreements allow Mitsui to fund 100% cost of the Condensate Stripping Facilities (CSF) which includes a liquid separation plant and pipeline in the project area, and as a Joint Venture Partner earn tolling fees and various other benefits, with a target completion date of first condensate production in 2012.

Sir Michael said: “Under the arrangements, project financing to be provided by Mitsui will also fund the State’s share of the condensate extraction costs.”

This means that Petromin and the State will not have to seek separate financing arrangements to fund their share of the equity.

Under the arrangements Mitsui will co-build the extraction facilities and will receive toll fee as a Joint Venture partner as well as financing cost from condensate revenue at first production of condensate.

The condensate will be sold on a net back basis to the InterOil refinery in Port Moresby at international market and local PNG market prices.

“The condensate stripping project agreement is the first step in bringing additional revenue and benefits to the people of Papua New Guinea from the InterOil-led Liquid Niugini Gas LNG project.

“We look forward to extending our relationship with the Japanese people and Mitsui Corporation,” Sir Michael said.