By Alexis Flynn
LONDON--Royal Dutch Shell PLC (RDSB.LN) is in talks with
liquefied natural gas producer InterOil Corp. (IOC) that could lead
to the Anglo-Dutch energy giant buying into the U.S. firm's Papua
New Guinea exploration license areas, Shell's two most senior
executives said Thursday, although neither was prepared to be drawn
on where discussions may lead.
"We have been in talks with InterOil and other interested
parties, but we can't say where [they are] going," said Chief
Financial Officer Simon Henry.
Papua New Guinea-focused InterOil holds three prospecting
licenses offshore the south-east Asian island nation, where early
appraisal drilling has revealed vast natural gas reservoirs are
located.
The firm also plans to build a 9 million metric ton a year LNG
terminal in Papua New Guinea but will need partners to help cover
some of the estimated $6 billion required to build a two-train
processing plant.
It is currently soliciting interest in the sale of a 25% stake
in the LNG project.
Shell Chief Executive Peter Voser skirted a question on whether
Shell was preparing a takeover bid for the Houston, Texas-based
firm. Shell recently pulled out of a bidding war for
Mozambique-focused prospector Cove Energy PLC (COV), citing the
high cost of the acquistion relative to other growth opportunities
within its existing business.
"It's an interesting play there," said Mr. Voser. "We have
talked to the government, we are looking at it," said Mr. Voser,
adding that any decision on investing in Papua New Guinea would
have to be framed against its wider portfolio.
"At the end, it will be profitability driven. It will be: Can we
do a project in a safe and reliable way, and will it deliver the
performance? I think to answer that question, it is too early for
that," said Mr. Voser.
InterOil wasn't immediately available for comment.
-Write to Alexis Flynn, alexis.flynn@dowjones.com
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