On Friday morning, Russell Searancke Wellington, arguably Papua New Guinea's (PNG) most connected oil and gas journalist, reported in an article titled "Shell joins battle for InterOil's gas output" that "well-placed sources said Shell (RDS.A) has submitted a new offer for InterOil's natural gas resources". Shell's recent bid for InterOil's (IOC) assets likely provided a compelling alternative to InterOil for the monetization of its Petroleum Retention License (PRL) 15, which hosts the world class Elk/Antelope gas and condensate resource. This new development was also presumably at least partially responsible for InterOil's allowing an exclusivity provision to lapse in its negotiations with Exxon (XOM) for a sell-down of its PRL.
Shell's "new offer for InterOil's natural gas resources" in conjunction with the lapse in Exxon's exclusivity provision in its negotiations with InterOil imply that Exxon now risks losing one of the highest return projects in the entire global oil and gas industry if it doesn't consummate a sale and purchase agreement (SPA) with InterOil imminently. On its second quarter conference call three weeks ago, Exxon indicated that its PNG LNG project is 88% complete and that the company is "advancing expansion opportunities, including negotiations with InterOil Corporation and Pacific LNG on the future development of the Elk/Antelope resource". Exxon further acknowledged that "major terms have already been agreed and should negotiations successfully conclude, ExxonMobil is proposing that 4.6 Tcf of the gas resource from the Elk/Antelope field be used to underpin the construction of an additional train at the PNG LNG project site."
More to the article. Can be found on Seeking Alpha
"On Friday morning, Russell Searancke Wellington, arguably Papua New Guinea's (PNG) most connected oil and gas journalist,"
Funny how Resourcearb knows he's arguably the most connected PNG O&G journalist and yet, Resourcearb doesn't even know his last name is Searancke, not Wellington. Russell Searancke is based in Wellington.
Shell's strategy may be to let XOM complete the SPA at E/A and then take out IOC and avoid a bidding war if
XOM needs are satisfied for a two train expansion. Shell then promises to cite an LNG facility at Gulf to satisfy the politicos. Probably a Shell best case scenario.
If XOM pushes back then better for IOC. Suspect this gets serious soon.