SYDNEY--InterOil Corp. (IOC) said Thursday it wants to keep open
the option of building a new gas-export plant in Papua New Guinea,
potentially putting it at odds with Exxon Mobil Corp.'s (XOM) plan
to expand an existing project there.
Houston-based InterOil owns the Elk and Antelope gas discoveries
in Papua New Guinea, an impoverished Southeast Asian nation that is
emerging as an important liquefied natural gas export hub.
In May, InterOil began exclusive talks with Exxon about the
latter investing in the fields, without disclosing financial terms
or how much of the assets it wants to sell.
"I'm coming onboard to build InterOil into a true LNG player. So
it's not my intention that we do a sale without carrying forward
any interest in this project," Michael Hession, who was appointed
InterOil's chief executive on Thursday, said in a joint interview
with InterOil Chairman Gaylen Byker.
Exxon has said it would prefer to use InterOil's gas to support
an expansion of its $19 billion Papua New Guinea LNG projects to
three production units, also known as trains, from the two that are
currently under construction.
However, Mr. Byker said InterOil would like to also consider the
potential development of a standalone LNG plant on the country's
southern coastline.
"And I think there are real important reasons for the PNG
government and the PNG people and the PNG economy to maintain that
optionality," Mr. Byker said.
Exxon estimates that it will need between 4 trillion and 5
trillion cubic feet, or TCF, of natural gas to support construction
of a third LNG train at PNG LNG.
Mr. Hession said he would take "a long, hard look" at InterOil's
assets before providing a definitive estimate of their size.
"They are very respectable multi-TCF fields, which quite
probably will be able to support a multi-train development," Mr.
Hession said.
The former head of Woodside Petroleum Ltd.'s (WPL.AU) Browse LNG
resource, Mr. Hession takes the reins of InterOil at a challenging
time for the LNG industry. The specter of cheaper LNG supplies into
Asia emerging from North America and East Africa is making project
developers in Australia, which neighbours PNG, increasingly
nervous.
PNG's cost base, however, is lower than Australia's thanks to
its cheaper sources of labor.
"It's got some of the best fiscal terms in the world and it's
actually got one of the best cost structures in terms of building
these things," Mr. Hession said.
InterOil has been searching for a new CEO since Phil Mulacek
retired in April.
Write to Ross Kelly at ross.kelly@wsj.com
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