By OGJ editors
HOUSTON, Apr. 12 -- InterOil Corp.’s InterOil and Pacific LNG Operations Ltd. have agreed with Samsung Heavy Industries and FLEX LNG Ltd. to move ahead with construction and operation of a 2 million tonne/year (tpy) floating LNG processing vessel (FLNG). The agreements are conditional upon Flex shareholder approval and final investment decision (FID).
The FLNG project is part of proposed infrastructure to liquefy natural gas from onshore Elk and Antelope gas fields in the Gulf Province, Papua New Guinea, in line with preliminary arrangements with Energy World Corp. and to link with InterOil's proposed condensate stripping plant. That plant is being pursued in joint venture with the Mitsui Group.
The FLNG vessel's operations are targeted for mid-2014.
FLEX LNG has informed InterOil, said the company announcement, that it completed the generic frontend engineering and design (FEED) in 2009. The project-specific FEED is to start in May of this year, working towards an FID before yearend.
The agreements, said the company, represent a continuation of the more than 12-month collaboration among Samsung Heavy Industries, FLEX LNG, InterOil, Pacific LNG, and Liquid Niugini Gas Ltd. (LNGL), InterOil's joint-venture LNG project company with Pacific LNG, to develop the first floating LNG production.
FLEX LNG and Samsung Heavy Industries will be responsible for design, engineering, construction, and commissioning of the FLNG vessel. FLEX LNG will also be joint operator of the FLNG vessel together with LNGL. Construction of the FLNG unit will be fully financed by FLEX LNG and Samsung Heavy Industries.
The FLNG vessel is to be moored alongside the proposed jetty in the Gulf Province, which will be shared with InterOil's proposed land-based LNG facilities, and have production capacity of up to 2 million tpy of LNG and be able to process an estimated 2.25 tcf of gas over 25 years.
FLEX LNG will receive 14.5% of the revenue, less agreed deductions and premiums, from the sale of LNG from the FLNG vessel for an initial 15 years. For the next 5 years, FLEX LNG will receive 12.5% of the revenue and 10% of the revenue for the last 5 years. During the 25 years of the contract, LNGL will become a part owner of the FLNG vessel.