projectdevelopmentupdate!! -...
TRANSCRIPT
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Henry Aldorf President Liquid Niugini Gas President Pacific LNG Opera;ons PTE.LTD
6th Annual LNG World -‐ September 2011
The Gulf LNG Project
Project Development Update
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LNG - Vision to Reality (FID 5mtpa by YE 2011 à 8mtpa FID by YE 2013 or sooner)
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Liquid NIUGINI Gas :A PNG State and Private Aligned Partnership Ø InterOil
• New York Stock Exchange listed~ $3 billion Market Cap Company
• Major Energy supplier in PNG • 36000 B/D Refinery, • 36 Wholesale Terminals • 53 Service stations • 1000 employees • World Class Safety record: Eight million Man Hours without LTA
Ø Pacific LNG • An Affiliate of Clarion AG. Switzerland , Private Investment
Company specialized in Energy and Mining Developments • ~20% of Elk Antelope fields • 47.5% of Liquid Niugini Gas • Major Shareholder of InterOil
Ø PNG State • PNG Government through Nominee to acquire 22.5% of LNG
Project
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Condensate
60,000 B/D Gross, target 15,000 per CSP
1.5 Billion BOE Elk Antelope fields
Train I First Cargo 2014
InterOil and Pacific LNG Vision for The Elk Antelope Fields
LNG
57,00 BOE/D 2mmt gross
Total
269 000 BOE/D gross Maximizing value through the value chain of 8.2 TCF
Additional 3mtpa expansions as 3C moves to 2C reserves
LNG
38,000BOE
3mmt gross LNG
57,000 BOE/D 3mmyt gross
Train2 First Cargo 2014
Elk and Antelope Fields Certified March 2010
Train 1 b expansion 2015
Train 1 c expansion 2016
LNG
57,000 BOE/D 3mmt gross
CSP First Cargo 2014
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The Resource: 2010 Third Party Resource Es;mate of Elk and Antelope Underpins a large LNG development with a 5% increase over 2009
As at December 31, 2010 Case
Low (C1)
Best (C2)
High (C3)
Initial Recoverable Sales Gas(Tcf) 6.47 8.59 10.44
Initial Recoverable Condensate (MMBbls) 105.3 128.9 151.4
Initial Recoverable MMBOE 1,183.6 1,560.4 1,891.1
Gross Con;ngent Resource Es;mate for Gas and Condensate as of December 31, 2010
An evaluaCon of the potenCal resources of gas and condensate for the Elk/Antelope field has been completed by GLJ Petroleum Consultants Ltd., an independent qualified reserves evaluator, as of December 31, 2010 The esCmates presented are in accordance with the definiCons and guidelines in the COGE Handbook and Canadian NI 51-‐101 Gas in place increased almost 1TCF from 2009 to 2010
C1 enough to supply 8mtpa LNG and C2 enough to supply 11 mtpa LNG FaciliCes
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Flow Rate Comparison of Elk/Antelope Wells
Well Gross Reservoir
Net Reservoir
Percent Pay
Production Tubing OD
Flow Test Natural Gas
Condensate
Elk-1 620 Ft. 88 Ft. 14% 5.5 inch 102 MMcfd 510 BCPD
Elk-4 600 Ft. 166 Ft. 28% 4.5 inch 105 MMcfd
1,890 BCPD
Antelope-1 2,600 Ft. 2,277 Ft. 88% 7.0 inch 382 MMcfd
5,000 BCPD
Antelope-2 1,224 Ft. 1,175 Ft. 96% 7.0 inch 705 MMcfd
11,200 BCPD
§ The Antelope-‐2 and previous wells have confirmed over 1.2 Bcf/d of producCve capacity
§ The condensate raCo established at the top of the Antelope-‐2 reservoir further enhances the economic a[racCveness of the proposed condensate stripping facility
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Gas Stripping Plant – Phased Ramp-‐Up
On August 4, 2010:
Signed JVOA for Condensate Stripping Plant (CSP) with Mitsui
§ InterOil and Mitsui will each have a 50% ownership stake, before the State of Papua New Guinea’s statutory right to acquire up to 22.5% in the CSP.
§ Mitsui will be responsible for arranging or providing financing for the capital costs of the plant, if be[er than the contractor EPC bids.
§ Mitsui does not own or receive any liquids, which stays in PNG for domesCc processing.
Executed an Op;on Deed to acquire interests of up to a 5% in the Elk and Antelope fields and in the liquefied natural gas (LNG) Project
§ A`er FID of CSP, Mitsui has opCons to acquire interests of up to a 5% in the Elk and Antelope fields and in the LNG Project on equal terms to others, so long as Mitsui has a more compeCCve financing structure.
The CSP facili;es are phased-‐in to save the historical cost and project cost risks to the PNG state, landowners and all stakeholders. State capital is required for upstream once the PDL is awarded, but is covered by a paid carry and reimbursed from future State revenue.
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Elk/Antelope Field Upstream JV -‐ Equity
Condensate Stripping Plant
Gathering Pipeline
Gas Pipeline
Condensate Pipeline
Condensate Stripping Project JV IOC Upstream & Mitsui (State to Entry)
Project Financed by Mitsui – Direct or Third ParCes 12 year Tolling Agreement – Fixed Return
End Agreement Assets are Owned by Upstream JV Covers CSP No. 1
CSP No.1 ~ 450 MMSCFPD
No need for addi;onal wells to reach 5 mtpa
Up to 12 addiConal wells Upstream JV -‐ Equity
LNG Capacity @ ~ 11 mtpa
Upstream Development Ac;vi;es
(target 5mtpa FID by YE 2011 & 8mtpa FID by mid-YE 2013 or sooner)
CSP No.2 ~ 450 MMSCFPD
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Dry Gas Pipeline LNGL*
Equity or Other Means
Condensate Terminal Upstream JV
Equity
EWC Mid-‐size LNG Flex/Samsung FLNG
* Depends on best to obtain non-‐equity financing
LNG Loading Je[y (& Condensate)
LNGL Equity *
* Shared FaciliCes – Likely recovery by tariff
Pipeline License
5mtpa FID by YE 2011 8mtpa FID by mid-‐YE 2013
Gulf Coast Loca;on
Mid-‐Stream: Pipeline and LNG Plant
Condensate Pipeline Upstream JV
Equity
Approx. Pipeline Route to Bluff Point
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LNG Facilities
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LNG Plants
LNG
Modular LNG
Lar Large scale LNG
• Cookie cu[er design fits all • Only gas treatment site specific • Low costs simplified 3-‐6 months FEED • +/-‐$450 per mt • AddiConal units 10% cheaper • Main Synergies in the shared faciliCes • 30 months development Cme
• Site specific custom design • Expensive 8-‐12 month FEED • $650-‐$1500 mt • AddiConal units 20% cheaper • Main synergies in shared faciliCes • 42-‐60 months development Cme
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LNG
Upstream
ü No reinjecCon of gas required ü Accelerated liquid recovery
ü ReinjecCon compressors eliminated
ü No reinjecCon wells ü No reinjecCon pipelines
ü Stepwise plant expansion of 0.5 mtpa
ü Increments matched to upstream producCon
ü Proven technology ü Earlier producCon
ü Lower installed capital cost ü Lower maintenance downCme
ü Lower operaCng expense
ü Lower failure risks ü Greater reliability
ü Improved energy efficiency due to CCGT
ü FID of 8mtpa by mid-‐YE 2013
Project Benefits of Lower Risk Modular LNG
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The LNG Plants: EWC LNG Project Partnership
On February 2, 2011, InterOil and PACLNG and Energy World Corpora;on completed final documenta;on defining the contractual terms rela;ng to the proposed 3 mtpa plant.
§ Project Funding and ConstrucCon Agreement .
§ Shareholder Agreement .
§ The agreements with EWC provide a framework for the possible expansion of the iniCal LNG plant’s capacity to up to 8 mtpa of LNG.
The ini;al 3 mtpa modular LNG plant is expected to process an es;mated 2.25 Tcf of natural gas over 15 years.
§ EWC will be enCtled to a fee of 14.5% of the proceeds from the sale of LNG by the upstream partners, less agreed deducCons and financing costs.
§ The LNG project with EWC is designed to link with InterOil's proposed condensate stripping plant (CSP) with Mitsui Group and to accelerate the intended moneCzaCon of the Elk and Antelope fields.
The current LNG project schedule is aiming for the FID this year, with a proposed combined plant start-‐up approximately 30 months later.
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InterOil and PACLNG Expand to 5 mtpa with Floa;ng LNG Project
On April 11, 2011, InterOil and Pacific LNG Opera;ons executed agreements with FLEX LNG LTD and Samsung Heavy Industries for a floa;ng liquefac;on project in Papua New Guinea with targeted start of LNG produc;on in 2014.
§ FLEX LNG has already completed the generic Front-‐End Engineering and Design (FEED) in 2009.
§ Project specific FEED started June 2011.
§ The parCes intend to work towards reaching a final investment decision (FID) before the end of 2011.
§ FLEX LNG and Samsung Heavy Industries will be responsible for the design, engineering, construcCon and commissioning of the FLNG vessel.
The FLNG vessel is expected to be moored alongside the jeey and have a produc;on nameplate capacity of up to 1.8 -‐ 2 million tons of LNG per annum.
§ ConstrucCon of the FLNG unit will be fully financed by FLEX LNG and Samsung Heavy Industries.
§ FLEX LNG will receive, less agreed deducCons and premiums, 14.5% of the proceeds from the sale of LNG by the upstream partners from the FLNG vessel for an iniCal 15-‐year period.
§ The LNG project with EWC is designed to link with InterOil's proposed CSP with Mitsui Group and to accelerate the intended moneCzaCon of the Elk and Antelope fields.
Samsung provides the construc;on financing and all performance guarantees
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EWC’s Experience § EWC’s CEO is as a co-‐founder of CEPA a Hong Kong listed independent power producer that has developed over 6,000MW of electrical generaCon throughout Asia.
§ EWC developed and operates the Sengkang gas field (5TCF) and built the Sengkang power plant in South Suluwesi.
§ EWC build the first small LNG plant in Western Australia and pioneered LNG transportaCon by road.
§ EWC and Tokyo Gas sign HOA in 2010 for exclusive negoCaCons on farm in and LNG Off take from the Sengkang project.
§ EWC was awarded permit by Philippines Government for a 2mtpa LNG terminal and a 300M 2011 W power plant.
§ July 2011 Richard Chandler the Hong Kong billionaire bought ~15% of EWC.
2x600 MW Sual Power Plant, Philippines
310 MW Navotas I & II Power Plant, the Philippines
2x367.5 MW Pagbilao Power Plant, the Philippines
135 MW Sengkang CCGT Power Plant, Indonesia
2x350 MW Shajiao B Power Plant, China
3x660 MW Shajiao C PowerPlant, China
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Energy World
Teaming up with industry leaders on modular LNG
Energy World has brought together distinguished global players, such as Chart Industries and Chemicals and Siemens to develop an efficient, electric drive, modular LNG system that can be used in a variety of locations.
§ LNG process provider § Cold Boxes § Gas Treatment (TDE) § Liquefaction BOP
§ Electrical & Rotating Equipment § Electrical BOP
Other Consultants and Suppliers:
§ CH.IV International – LNG process Engineering § Arup – Civil Engineering § Woodfield – Loading Arms § Penspen – Pipeline routes and design § University of Southampton – Cryogenic Consultants
§ Investor and Co-developer § LNG Tank Construction
§ Civil Works
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Samsung Heavy Industries ($189 Billion Company)
§ WorleyParsons to complete top-side FEED. § Samsung to complete Hull FEED. § Samsung finances 100% of the construction
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About WorleyParsons § WorleyParsons is a global engineering contractor with both offshore, gas processing and base load
onshore LNG track record.
The company has a long history of developing and supporCng world-‐scale LNG faciliCes in over 28 projects and more than 10 countries around the world.
§ Greenfield and Brownfield LNG § Offshore LNG § RegasificaCon § LNG ModularisaCon § Mid and Small scale LNG § Infrastructure § Environmental
§ Pluto Train 1 4.3 mtpa EPCM § Pluto train 2/3 4.3 mtpa FEED § ConfidenCal client 6 x 1 mtpa pre-‐FEED § Iran LNG 2 x 5 mtpa detailed engineering § ConfidenCal client 2 x 2.6 mtpa PDP/FEED § ConfidenCal client 2 x 2.6 mtpa PDP/FEED § ConfidenCal client 2 x 5.0 mtpa FEED
Total: 17 LNG trains, > 45 mtpa capacity § In addiCon they hold Long term Improve contracts for a total of 23 LNG trains around the world
Key offshore experience in WorleyParsons includes
§ Fixed Offshore Platorms: 370+ § Gas Processing Plants: 400+ § Subsea Pipeline Projects (last 10 years): 170+ § Offshore Pipelines (since 1998): 5,000+ § FloaCng ProducCon Systems: 30+
LNG Experience Offshore Experience
Organisa;on – Key Facts
§ 32 900 Personnel § Offices in 41 Countries around the world § 75 % of UK Gas supply goes through a WorleyParsons
designed plant § The FLEX LNG FEED is conducted from WorleyParsons
London Office
Current LNG Workload (as of May 2011)
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InterOil Refinery – InterOil Proven World Class Operator
§ 36,500 bpd, Sized to meet current and predicted demand in PNG market.
§ One of the larger deep-‐water harbor's in the region. Harbor dra` exceeds that of Sydney and Brisbane.
§ OpCmizaCon of refinery increased efficiency.
§ Strategic locaCon in South East Asia.
§ In OperaCon since 2004.
§ Proven Operator in PNG, Refinery is more complex then a LNG facility.
§ ~5 million man hours without LTA.
§ All LNG operators staff up from their refineries.
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Operatorship
§ UPSTREAM
§ InterOil is the Operator for the Elk/Antelope and been the most succesful explorer in PNG
§ InterOil has been operaCng in PNG for the last 15 years and vast experience in remote locaCons
§ InterOil has drilled 2 world records wells in PNG
§ MIDSTREAM
§ InterOil currently operate the only refinery in PNG with 5 million man hours without a LTA which places them in the world calss operators bracket.
§ All LNGL personnel will be refinery trained and transiCon into LNG operaCons under a program of structured operator training that will commence during construcion at Chart and Samsung as most LNG operators do
§ DOWNSTREAM
§ Liquid Niugini Gas is the Operator for the pipeline and LNG faciliCes, with back-‐up from InterOil and others
§ Liquid Niugini Gas will contract an internaConal experience operator to assist for the commisionning and during the first 2 years of the LNG operaCons
§ This internaConal operator will be contracted to assist in operaCng the LNG land modular and the fix floaCng LNG
§ LNGL will be tendering for respected operators such as CB&I, PT Badak or Petrofac. § InterOil is one of the largest developers of PNG Human reources and will conCnue this philosophy with
the LNG faciliCes
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Off-take & Economics
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Global LNG demand is set to grow at 7% CAGR over the next 10 years
Source: Bloomberg, Bernstein Research EsCmates, October 13, 2010
Incremental liquefaction capacity growth to slow over the next few years § Middle East LNG boom is coming to an end § Leading to Cghter supply-‐demand balance over next 3 – 4 years
Additional export liquefaction capacity is required § Market window for the start up of new projects in 2014/15 looks to be attractive § Loss of Japanese nuclear power has dramatically tighted LNG market
Source: Bernstein Research, October 13, 2010
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Observa;ons Of Current Australasian LNG Market
World LNG Market Outlook* § The LNG market is growing rapidly to support increasing global demand for natural gas as a cleaner source of
energy. § By 2015, it is projected that LNG will contribute 12% towards meeCng global gas demand compared to 8% in
2007. § Although the growth dynamics vary on a regional basis, demand for LNG is projected to double to 350 million
tons per year (MTPA) in 2015 from 170 MTPA in 2007.
§ LNG growth in the Pacific Basin is driven by the rapid demand growth in India and China outpacing the development of domesCc supplies. The impact of the Japan crisis will also conCnue to drive new electricity plant development towards natural gas.
We are seeing delays and slow downs in many of the major LNG project developments in the Asia/Australia region.
The tightening of the market for new and currently un-contracted LNG supplies in the 2014 – 2017 timeframe positions LNGL’s Gulf LNG Project as one of the very few uncontracted LNG supply sources.
*Source: Widely distributed LNG Industry research and Liquid Niugini Gas Limited
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The Gulf LNG Project has secured HOA’s so far for 1.3 mtpa of LNG off-‐take
Noble Group - 1 mtpa of LNG off-take at PNG market price for 10 years § World leader in supply chain management in just 20 years and 55 Billion dollars in sales for 2010. § Specialize in the originaCon and delivery of strategic raw materials, adding value at each stage of the
supply chain. § Technical ship management, trade finance and coal mining, amongst others. § Noble has a diverse consumer base ranging from the power sector to the steel and ferro-‐alloy industries,
and with its global reach the Company is able to create meaningful synergys with other businesses within the Group.
§ Global network encompasses more than 150 office and plant locaCons in 38 countries across five conCnents. Our over 11,000 employees include 68 naConaliCes.
Philippines LNG market with 300,000 base load to EWC Power Hub § InterOi and Pacific LNGl are in a JV with EWC for 2million mtpa for a gas receiving terminal and 300MW of
gas driven power to supply Manila. § Net back price at PNG LNG market price. § Long term fuel supply relaConships with major new asian uCliCes and market
Other OFF-take § Discussions ongoing with severeal potential offtakers § Expext an additional 2 to 3 parties for remaining volumes § Additional HOAs anticipated in the next few months
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Liquid Niugini Gas Limited’s LNG Marke;ng Plans
LNGL plans to market 75% of the ini;al capacity under long-‐term olake agreements and the balance on the spot market
§ Start up capacity esCmated at 75% ramping up to 95% of total 5 mtpa iniCal capacity § LNGL plans to market 75% or 3.8 mtpa § One mtpa under first HOA agreement with Noble Group § 0.3 mtpa dedicated to Philippines power project with Energy World Corp.
Remaining 2.5 mtpa of LNG olake is currently being nego;ated
§ Discussions ongoing with more than one potenCal owaker § Expext an addiConal 2 to 3 parCes for remaining volumes § AddiConal HOAs anCcipated in the next few months
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Midstream LNG Project Pipeline License Gas
Dry Gas Pipeline § ~120km buried 32” dry gas pipeline from CSP to liquefaction plants at
Gulf and a 12-20” pipeline to floating LNG at jetty export terminal facilities
Export Terminal and Common Facilities § ~6km breakwater, causeway, moorings and jetty § Offices, warehouses and accommodation
Petroleum Processing Facilities Licences Liquefaction Facilities
§ Liquefaction plants land based and fixed floating of 11 mtpa capacity § LNG storage tanks 180,000 m3
§ Pipeline connecting the LNG storage tanks to the export terminal loading facilities
§ LNG loading facilities § Return pipeline from loading facilities to liquefaction plants and LNG
storage tanks
Upstream Gas Project Petroleum Development Licence
Elk and Antelope Fields § Elk Antelope fields, - 8.59 tcf Recoverable Sales Gas, and 129 mmbbls
Condensate (2C resource) § 7 to 12 wells producing up to 200 -400mmscfpd each (initial capacity) § 1 water reinjection well and 1 surveillance well § Compression facilities
Condensate Stripping Facilities § 12-14” Infield gas gathering pipelines § Fields to CSP wet gas trunk line § Condensate stripping plants - up to 1.8 BCF capacity § Produced water re-injection pipeline from CSP to fields injection well Pipeline Licence Condensate
Condensate Pipeline § ~120km buried 12 3/4” condensate pipeline from CSP to condensate
storage tanks at Gulf § 100,000bbl condensate storage tank at the Gulf with plans to add
additional tanks when needed § Condensate recovery pipeline from Liquefaction plants to condensate
storage tanks § Pipeline connecting condensate storage tanks to ship loading facilities § Condensate ship loading facilities
PDL Elk Antelope
PL Gas PL Condensate
PPFL Land PPFL Fixed Floa;ng
Development Map
InterOil Gulf LNG Development Map
All
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Field Finance by InterOil
CSP Finance by Mitsui
Land Based LNG
Finance by EWC
Export Terminal Finance by InterOil
Pipeline to Coast Financing TBD
§ Wells § Condensate pipeline
§ Condensate stripping plant
§ Infield pipelines
§ Processed gas from CSP to LNG plants
§ Funded in return for 14.5% of LNG proceeds
Post the recent US$266 million net capital raising, InterOil based on current es;mates has the necessary funds to finance its share of the Project
InterOil Gulf LNG Financing
Floa;ng LNG
Finance by Samsung and FLEX LNG
§ LNG Jetty
§ Marine Infrastructure
Upstream Gas Project Mid-Stream LNG Project
§ Funded in return for 14.5% of LNG proceeds
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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Comparison of LNG Project Timelines
Project Agreement PA
Total project span 42 months -‐ Cost $1.2b(3.7mt) or $324 per mt
EG LNG PA FG FID
FID* Expected/confirmed FID
Off take OT
InterOil
Total project span 54 -‐ 60 months – Cost: $3.6b(8mt) or $750 per mt
FG FID PA
ExxonMobil -‐ PNG LNG
Total project span 72 -‐ 90 months -‐ Cost: $15b(6.6mt) or $2,270 per mt
FG PA FID OT
ConocoPhillips -‐ Origin
Total project span 72-‐ 95 months -‐ Cost: $35b(18mt) or $1,940 per mt
PA FG FID OT
First Gas (Expected) FG
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0.00.4
0.7 0.71.1
1.4 1.5 1.5 1.7 1.7 1.7 1.8 2.0 2.0 2.0 2.1 2.2 2.4 2.6 2.7 2.9 2.93.2 3.4 3.5 3.6
5.76.0 6.1
6.6
7.5 7.7
8.8
11.2
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
AD
GA
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&3
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at L
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Atla
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EG
LN
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Dam
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Dar
win
Bru
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MLN
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ai
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ale
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PN
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FOB
Bre
akev
en P
rice
(USD
/mm
btu)
11***
1
US$13.6 /mmbtu -‐ Term LNG Owake Price *
US$10.53/mmbtu -‐ Spot Price **
*Based on US$90/bbl Oil price, 14.85 slope ** Source: Bloomberg Dec 10, Jan 11 *** Source: InterOil and other accredited public sources (approx Adjusted Value)
10.4*** 11.3***
InterOil & LNGL is in the most compe;;ve LNG supply posi;on
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-$2,500
$0
$2,500
$5,000
$7,500
$10,000
$12,500
$15,000
$17,500
-$500
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
USD
(m
) C
um
ula
tive
USD
(m
)
Equity Cashflow - Expansion Case
$2.5 to $2.9 billion a
year
Projected Expansion Case InterOil Cash Flow to 2020
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InterOil Gulf LNG Project Modelling Assump;ons
Fields Export Terminal
LNG Pipeline CSP LNG
Modular LNG
Floating
Total Expansion Case Project CAPEX $0.30bn $0.35bn $0.26bn $1.41bn $4.05bn $1.10bn
Estimated Annual OPEX $97.0M $1.0M $5.0M $17.0M $66.5M $36.0M
Assumptions Oil Price $90/bbl Annual Inflation 2%
Condensate (Discount to Brent) $5/bbl Government Ownership 22.5%
LNG Prices and Slope $13.57/MMBtu (based on LNG slope of 0.1485) MMBtu/Mcf 1.080
Foreign Exchange Rate $USD/Kina 0.45 MMBtu/Ton LNG 52.02
Royalty & Development Levy 2% MMBtu/bbl 5.8
Corporate Tax Rate 30% Fuel & loss of LNG facilities
10% (accounted for in Reserve
Sale Gas calculation)
Avg. Condensate Tolling Fee $29.51/bbl CGR 17.2 bbl/MMscf
LNG Modular Tolling Fee Years 1 to 15 - 14.5% of Sales Proceeds Years 15 to 25 – 4.83% of Sales Proceeds Reserve Sales Gas 8.59 tcf
LNG Fixed Floating Tolling Fee Years 1 to 15 - 14.5% of Sales Proceeds Years 16 to 20 – 12.5% of Sales Proceeds Years 21 to 25 – 10.0% of Sales Proceeds
Reserve Sales Liquids 128.9 MMbbls
All Rights Reserved © InterOil 2011
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NPV – Tradi;onal LNG versus the Gulf LNG model (10.6MTPA)
$18,394
$28,493
$23,874
$35,926
$0
$7,500
$15,000
$22,500
$30,000
$37,500
Project Project + Taxes
$USD
(m)
TRADITIONAL
INTEROIL MODEL
The Gulf LNG financial plan is far superior to a Traditional LNG plan § Achieves a significantly higher NPV (10)
§ Positive cash flow at least 4 to 5 years before traditional LNG financing, worth ~ kina 20 billion
§ Gulf LNG built for at least 30% lower cost, and easier for PNG State equity
§ Built with modular flexibility allowing for faster ramp-up
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Phased Project
0
2
4
6
8
10
12
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Mtpa
Stage III -‐ Expansion ProducCon (Mtpa)
Stage II -‐ Expected ProducCon (Mtpa)
Stage I -‐ Base ProducCon (Mtpa)
7.6 Mtpa
10.6 Mtpa
Accelerated FID
Project Agreement FID
Early cash-‐flow worth ~ Kina 20 billion Revenue to Landowners, Gulf and State worth Kina 5 billion
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Advantages to the loca;on in Gulf Province
§ No need for a 300 kms submarine pipeline to POM
§ Gulf LNG project processes Gulf gas in the Guf Province
§ ~3000 Landowners in the Project § Socio-‐ economic insfracture will improve lives of the people of the Gulf Province through:
§ Educa;on § Health Care § Power & Fuel distribu;on § Training § Jobs § Port & road development
§ Housing § Avoid conges;on with the PNG LNG project in NCD & Central Province
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Na;onal Benefits
Based on 8 MTPA x 20 years: • ProducCon to average K13 billion per annum (GDP 40% higher than NaConal
Budget forecast for 2011) • Exports to increase by K12 billion per annum (80% increase on NaConal Budget
forecast for 2011) • Contribute around K5.5 billion in government revenue each year, assuming 22.5%
State parCcipaCon (70% increase on NaConal Budget forecast for 2011) • Historical MulCplier effect of LNG on the Region around 3 to 4 Cmes
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Total Cash Breakdown of PNG Government Take for First 10 Years
K68bn ($US31bn) generated in the first 10 years The PNG Government will have
paid back 100% of its investment AND have an addiConal K655m (US$295m) in equity cash flows
in 2015
-‐
10,000
20,000
30,000
40,000
50,000
60,000
70,000
-‐
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Cummulative PGK(m
)
PGK(m
)
Development Levy's Royalties Corporate Tax Government Equity Cash Flow Cummulative Government take
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Es;mated Benefits to Gulf Province
K700 million per year (averaged over 20 years) RoyalCes, development levies & equity benefits (80%), land rental &
compensaCon, wages and TCS expenditure (10%) and indirect benefits (20%)
0
200
400
600
800
1000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
K million
Year
Direct benefits Indirect benefits
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FID and Schedule
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$100 + million Pre-‐FID investments key to maintaining Schedule Lessons from EGLNG and Others
ü Condensate Line Pipe
ü Processed gas Line Pipe
ü Critical long lead infrastructure
ü Dump Trucks
ü Bulldozers
ü Excavators
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Feed Status
• CSP Completed EDG • Pipelines
• Northern route Completed Cronos • Southern route October 2011 Cronos
• Land based modular • Generic Completed Chart • Site specific November 2011 Chart
• Fixed FloaCng LNG • Generic Completed SHI • Site specific November2011 SHI/WorleyP
• Marine export November 2011 Wallingford
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Project Update and Future Milestones
The Gulf Project is moving ahead to reach FID § LNG faciliCes increased from 2mtpa to 5mtpa with
Samsung & Flex LNG fixed floaCng proposal, with targeCng 8mtpa
§ CSP faciliCes re-‐engineered for increased producCon volumes are nearing compleCon & ready for bid
§ Pipelines for natural gas and condensate have been designed to handle the capaciCes required for our target LNG volumes
§ Site specific engineering for land based modular LNG with Energy World is almost complete
§ ConCnuing LNG pre-‐investment to lower bidder risks and secure lower project costs
§ LNG off-‐take HOA was signed with Noble Group for 1 mtpa for 10 years, in addiCon to the 300,000 tonnes per annum dedicated to the Philippines Power Project
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#1 Priority is Achieving FID by 2011
Laydown area at Napa Napa is prepared to receive LNG project equipment
Benefits to the state and all stakeholders in the LNG project development include:
ü Land improvement
ü Increasing local employment
ü Lowers cost of construction bids
ü New loading wharf near completion
Wharf at Herd (CSP location) nearing completion to protect drilling timeline:
ü Land improvement
ü Readying site for Rig # 3 deployment
ü Lowers risk and contractor bid prices
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#1 Priority is Achieving CSP and LNG Project FIDs
The Gulf Project is moving ahead towards PNG Government approval of the fully integrated LNG project
§ Development plan and integrated Cmetable presented to the PNG government departments
§ PNG Government has been presented with economic models and the funding requirements
§ Dra` Gas Agreement has been filed with the State
§ PDL license applicaCon nearing compleCon, with environmental studies near compleCon
§ Geo-‐technical works completed and site and overall pipeline route selected for the land-‐based LNG plant and je[y
§ Social mapping complete for PRL #15 and is underway for pipeline route and LNG site
§ Herd upstream camp under construcCon for Upstream acCviCes
§ Upstream access road 70% complete from Herd to Elk and Antelope fields to protect drilling Cmeline
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Condensate Stripping Plant 2013 2011
Mid-‐Size Land based LNG (2 mtpa) 8 mtpa LNG + more
FloaCng LNG (2 mtpa)
2012 3 CSPs + more
IOC Refinery
Fixed FloaCng LNG Barge Condensate to Napa Napa
Elk/Antelope & Condensate Stripping Plant
2014 2015 2017 2016
Poten;al Full Scale Development Timeline
FID Nov/Dec 2011 depending on licenses and permits
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New Strategic Major LNG Supplier in Asia • Geopoli;cal Advantages free from :
• Middle East Issues
• West African conflicts
• Australian labor, Tax and Environmental issues
• Large DomesCc ConsumpCon Needs e.g. Indonesia
• Cost Advantages • Low marginal cost Producer with early Liquids
• On shore development
• Highly producCve wells
• High BTU Gas
• Close to Asian Premium users 9-‐11 sailing days
• High debt coverage raCo
• Sustainable producCon at low oil prices
• Huge Upside poten;al • ConservaCve resource cerCficaCon of the Elk Antelope fields
• 3.8 million acres in proven Hydrocarbon Basin