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Is Royal Dutch Shell Trying To Muscle Into InterOil’s LNG Project?

EXTRACT FROM RELATED ARTICLE: Now that it is out in the open, the story in The Sunday Chronicle is actually very damaging for Shell…

(Is Shell Trying To Muscle Into InterOil’s LNG Project?)

Sunday September 25, 2011

THE O’Neill-Namah government has moved into damage control mode for the second LNG project development in Gulf Province.

Meetings are to be scheduled over the next seven days to avert sending out a potentially damaging sovereign risk signal to the foreign investment community. The move will also distance the government from the stigma of a potentially corrupt inducement money totalling $US100 million promised by a multi-national company to shaft the second LNG developer.

The second LNG developer is Liquid Niugini Gas Limited, a joint venture entity jointly owned by InterOil and its partner Pacific LNG Limited.

The $US100 million offer is payable after dilution of InterOil’s project equity, cancellations of InterOil’s project agreement with the State signed in December 2009 and the company’s present PRL-15 over Elk/Antelope and dispossession of its exploration acres in Gulf Province.

The offer was made in writing on April 21 this year by Shell Exploration Company BV to investment bankers – Lazard Freres based in Paris and to New York-based Ambata Capital Partners – who were appointed by Petromin PNG Holdings Limited to act for them. Petromin is the custodial nominee company appointed by the State to hold the State’s 20.5 per cent equity in the second LNG project.

The state has still to exercise its right to acquire 22.5 per cent equity in the Gulf LNG project in accordance with provisions of Section 165 of the Oil and Gas Act.

The need for damage control arose following disagreement between InterOil and Petromin over operator-ship of the project. Petromin – through Petroleum and Energy Minister William Duma and his department – has been actively lobbying to have Shell Exploration Company BV imposed on InterOil as operator of the Gulf LNG Project. InterOil does not accept the deal.

InterOil contends that Shell cannot have it easy. According to industry sources Shell has spent no exploration dollars in the lead up to the second LNG project and is being manipulatively allowed through the back-door by Petromin to meddle in and delay the project development by four years to 2015 with first LNG cargo envisioned in 2018.

The position of the O’Neill-Namah government as stated by Prime Minister Peter O’Neill since taking up office has been to develop the two LNG projects together and for new and returning foreign investors to follow the laws of PNG and come through the “front door” to invest in PNG.

By operation of the project agreement between InterOil and the State, the appointment of an operator is not necessary until a final investment decision (FID) is made. InterOil has been working towards reaching FID by the end of this year. Petromin seeks to dispossess InterOil of its 4.6 million exploration acres in the Gulf of Papua under PPLs 236, 237 and 238.

Petromin has schemed “Project Zebra”under which it has mounted a hostile takeover or dilution bid of InterOil’s LNG project equity position as a condition of Shell’s engagement as Gulf LNG project operator.

The scheme was hatched by Petromin in March this year which Petromin maintains was purportedly at the direction of displaced Prime Minister Grand Chief Sir Michael Somare and Minister Duma.

Persons close to the former Prime Minister say Sir Michael was never consulted by Petromin for authority to seek an operator for InterOil’s LNG project.

InterOil as explorer and discoverer of the substantial Elk and Antelope natural gas and condensate reservoirs have been placed in a less than winning position after spending millions of exploration dollars over 15 years.

Last month Shell signed a strategic partnership agreement with Petromin to pursue oil and gas exploration and development interests in PNG including the bid by Shell to acquire 50.4 per cent of a vertically integrated and fully aligned unincorporated LNG joint venture.

RELATED “SEEKING ALPHA” ARTICLE: Is Shell Trying To Muscle Into InterOil’s LNG Project?

EXTRACT: Now that it is out in the open, the story in The Sunday Chronicle is actually very damaging for Shell…

74 page July 2011 document leaked to us – The Future of Shell’s Clyde Refinery and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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