While interoil’s own press release (16 Nov 2012) indicates, in...

While interoil’s own press release (16 Nov 2012) indicates, in part, that the selection of a partner re: LNG plant will be concluded in the next fee weeks (see below), the chatter on the shareholdersunite interoil forum leans towards EWC being involved in some form or other (see selected comments from 5 different posters following interoil press release). With P O’Neill (PM PNG) instructing the Ministerial Gas Committee to report to Cabinet on key aspects of the NEC approval of the Gulf LNG project by November 30, 2012, and the PNG PM as well as senior Interoil staff (CEO and Henry Aldorf) presenting at the 2-5 December 2012 Sydney conference, it would be nice to have further clarification on these matters prior to this conference.

(Part of) Interoil Press Release 16 Nov 2012:

Now that the Government's position has been clarified, InterOil anticipates being able to conclude an agreement for a sale of an interest in the Elk and Antelope resource in Petroleum Retention Licence 15 and the first 3.8 million tonnes per annum Gulf LNG Train to a partner or partners in the coming weeks. Major oil companies, national oil companies, and Asian utilities have been actively engaged in the process.


Selected comments from 5 different posters (16 – 18 November, 2012) on shareholdersunite interoil message board:

Comment 1:
We can try and predict all night about operators (I assume the upstream operator means both resource and CSPs?) and whether there will be one or 2 plants. With that possibility of 2 plants it hints IOC is free to choose EWC and the choice of operator will dictate whether its EWC for all or EWC and a large modular /stick for the gov, or a large modular/stick for all…… I also expect EWC will be popping in power plants based on O'Neill's trip to Indon and discussions with their PM.

Comment 2:
A thought. We know that there was this positive breakthrough a couple of weeks ago with the government. We also know that O'Neill went to Indon to see EWC's "facilities" there and he clearly stated that he was impressed and knew how to help them avoid the roadblocks they've encountered. We know PNG wants the power plants and EWC's are very efficient and perfect for PNGs needs. We know IOC has wanted to work with EWC and O'Neill was Treasurer and at the EWC approval back in 2011.

Is it possible that this is the government's way of picking EWC for IOC and thereby negating IOC's need to explain why they would work with a company like EWC? Is this what O'Neill meant by knowing how to help EWC avoid the roadblocks it has encountered? We know EWC has access to lots of Chinese money as well as Chandler. By asking for up to 50% of the upstream does this also help IOC avoid a cheap takeover attempt because the funding has been figured out to get IOC substantial cash up front, announce FID quickly and monetize?

Anyone thinking this is bad for IOC or is a resource grab by PNG needs to step back and look at O'Neill's sudden epiphany regarding EWC and Indon. May not be right but it makes sense.

Comment 3:
EWC was initially IOC's prefered LNG producer as the terms were unprecedented. 1.5 yrs. ago Phil said 'the world now knows what our deal is and what it takes to partner with us' refering to EWC's deal. What I think has happened was this. We know, after approval, EWC was black-balled by DPE and IBs solicited alternate proposals. Those bids were coming in substantially below EWC's terms for both IOC and PNG as EWC was no longer the benchmark for bidders. IOC had been steadfast promoting IOC to PNG as the best option.
A combination of low bids, labor shortages, conventional project costs overuns and lobbying of O'Neill/DPE led to a 'significant meeting' a couple of weeks ago. I think at that meeting, EWC was agreed to by O'Neill as an approved solution for Gulf LNG 'if' IOC chose them as winning bidder. Indo site visits of EWC facilities were made by O'Neill as part of his DD. We do know that EWC technology is endorsed by JP and Mitsui was willing to finance a $1 billion CSP to make EWC possible. We learned in CC yesterday that Gulf LNG is endorsed by NEC/O'Neill and EWC is still 'in the mix' and they are financable.
I think EWC has returned as the bidder to beat and final offers are now being solicited to possibly attract a proposal with even better terms. I agree this could well happen quickly.

Comment 4:
Henry A has always said we are proceeding as if we had approval . Like all things IOC this to can change. This makes great common sense for all. O'Neil further affirmed when he said get started now. No one can be as far along as is EWC and Mitsui. They have been FEED ready since Dec 2011. I think we know more soon.

Comment 5:
By not being part of the first plant they (PNG Government) can watch to see if IOC can bring it in on time and on budget and have it operating correctly. EWC may be the best bet for that and if it all works PNG can join in the 2nd 4mmpta EWC plant or go their own way. I would bet Indon EWC plant will be watched very closely.