ProjectDevelopmentUpdate!! - shareholdersunite.comshareholdersunite.com/wp-content/uploads/2011/09/Aldorf... · ProjectDevelopmentUpdate!! 2 LNG - Vision to Reality ... # Woodfield

                                                               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    

2  

LNG - Vision to Reality (FID 5mtpa by YE 2011 à 8mtpa FID by YE 2013 or sooner)

3  

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

4  

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

5  

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  

6  

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  

7  

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.    

8  

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    

9  

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  

10  

LNG Facilities

11  

 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    

12  

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  

13  

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.  

14  

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  

15  

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

16  

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

17  

Samsung Heavy Industries ($189 Billion Company)

§  WorleyParsons to complete top-side FEED. §  Samsung to complete Hull FEED. §  Samsung finances 100% of the construction

19  

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)  

20  

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.    

21  

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  

22  

Off-take & Economics

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  

24  

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    

25  

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

26  

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  

27  

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  

28  

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

29  

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  

30  

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

S

Qat

ar g

as-4

Aru

n

Liq

uid

Niu

gini

G

as

Atla

ntic

LN

G 1

Bo

nta

ng

Qat

arg

as

Atla

ntic

LN

G 2

&3

Qah

at L

NG

Atla

ntic

LN

G 4

EG

LN

G

ELN

G 2

Dam

ietta

ELN

G 1

Dar

win

Bru

nn

ei L

NG

OLN

G

MLN

G T

iga

Tan

ggu

h

Bra

ss L

NG

MLN

G

Yem

en L

NG

MLN

G D

ua

Per

u LN

G

No

rth

Wes

t Sh

elf

An

go

la L

NG

Ken

ai

US

Sh

ale

gas

Sn

oh

vit

QC

LNG

PN

G L

NG

Plu

to

Go

rgon

Sak

hal

n 2

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  

-$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    

Page  31  

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  

33  

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

34  

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  

35  

                                                                                         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  

36  

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  

37  

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

38  

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  

39  

FID and Schedule

40  

$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

41  

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                                    

42  

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  

43  

 #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

44  

 #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  

45  

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

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