PLANS to fast-track a collaboration between Papua New Guinea’s two leading gas reserve holders have hit a speed hump after a disgruntled InterOil shareholder had a court win in Canada in early November.
The participants in the PNG LNG project and the proposed Papua LNG project had planned to meet in October to start formal discussions towards working together to develop and market the giant gas potential of the Elk-Antelope and fields on the back of an expected take over by ExxonMobil of Elk-Antelope discoverer InterOil.
That appeared well on track when the majority of InterOil’s shareholders voted in favour of the ExxonMobil takeover offer for the company on September 21 with the transaction expected to close by the end of September 2016.
However, that was put on hold when InterOil founder Phil Mulacek lodged an appeal to the Yukon court claiming the agreement wasn’t to the benefit of all InterOil shareholders.
The situation appeared fairly clear cut on October 7 when the Supreme Court of Yukon approved the transaction, including finding that the transaction was fair and reasonable.
However, Mr Mulacek then filed a notice of appeal and requested a stay of the Supreme Court’s decision.
To the surprise of some analysts, the Court of Appeal of Yukon upheld Mr Mulacek’s appeal on November 5, putting everything on hold.
InterOil’s chairman, Chris Finlayson, said while the ruling was disappointing the company we’re pleased that ExxonMobil has advised that they remain fully supportive of the transaction as InterOil works through the issues raised by the Court.
InterOil is now in discussions with ExxonMobil with respect to extending the outside date for the closure of the transaction.
The company is also considering options to file for leave to appeal to the Supreme Court of Canada. Oil Search, which is a member of both the PNG LNG and Papua LNG camps, believes that integrating the two projects will bring significant benefits to the companies involved – and PNG.
The company recently told an Australian conference that it expects project integration could involve an initial construction of two new ~4 MTPA trains constructed together at the existing PNG LNG site, operated by ExxonMobil, with FID targeted for end 2018 and the trains operational by 2022/23.
Those trains would be underpinned by approximately 10 tcf of 2C resource from the P’nyang and Elk-Antelope fields, with resource upside for a possible further train from planned drilling (Muruk, Antelope 7, P’nyang and other exploration).
That type of scenario would certainly have a significant impact on PNG’s GDP.
Many leading analysts have suggested the integration plan would put PNG well ahead of other proposed LNG developments in what has become a very tight market.