Economics and Financing of Integrated Gulf LNG Project

Transcription

1 Economics and Financing of Integrated Gulf LNG Project Collin Visaggio Chief Financial Officer September 2012

2 Page 2 Cautionary & Forward-Looking Statements

3 Papua New Guinea Poised to Join the Ranks of Asian LNG Suppliers Page 3

4 LNG Project Agreement Fundamental Principles 1. World Class Project The size and scope of the Gulf LNG Project is of international scale and quality. InterOil plans to apply best industry practices with commensurate resources. 2. International Competiveness The LNG Project will be capable of achieving consistent product delivery into export markets at a cost which is internationally competitive. 3. State Support The State will provide support to assist the project in accordance with the terms and conditions of the LNG Project agreement.. 4. State Participation The State will have the right to acquire an interest of up to of 22.5% in the project. 5. Market Opportunities The timely speed of development of the LNG Project is essential to meet LNG market opportunities. Page 4

5 The Resource: 2011 Third Party Resource Estimate of Elk Antelope. Underpins a Large LNG Development Gross Contingent Resource Estimate for Gas and Condensate as of December 31, 2011 As at December 31, 2010 Low (C1) Case Best (C2) High (C3) Initial Gas in Place (Tcf) Initial Recoverable Sales Gas (Tcf) Initial Recoverable Condensate (MMBbls) Initial Recoverable MMBOE 1, , ,891.1 An evaluation of the potential 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, 2011 The estimates presented are in accordance with the definitions and guidelines in the COGE Handbook and Canadian NI Gaffney Cline completed a full review for the State of PNG which reinforced resource estimates to underpin the required 2009 LNG Project Agreement C1 enough to supply 8 MTPA LNG Facilities and C2 enough to supply 12 MTPA LNG Facilities Page 5

6 Integrated Gulf LNG Development Map Development Map PL Condensate PDL Elk Antelope Upstream Gas Project Petroleum Development Licence Elk and Antelope Fields Elk Antelope fields, tcf Recoverable Sales Gas, and 129 MMbbls Condensate (2C resource GLJ Petroleum 31 Dec 2010) 5 to 11 wells 1 water reinjection well and 1 surveillance well Compression facilities Condensate Stripping Facilities Infield gas gathering pipelines Fields to CSP wet gas trunk line Condensate stripping plants - up to 1800 MMscf capacity Produced water re-injection pipeline from CSP to fields injection well Pipeline Licences 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 Dry Gas Pipeline ~120km buried 36 dry gas pipeline from CSP to liquefaction plants at GulfFacilities Licence Midstream LNG Project Petroleum Processing Liquefaction Facilities Liquefaction plants land based of 8 Mtpa capacity with potential for expansion to 12 Mtpa LNG storage tanks 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 Export Terminal Causeway, breakwater, moorings and jetty Export terminal offices and control room Common Facilities Offices, warehouses and accommodation Page 6

7 LNG Project Capital Expenditure Comparison Project Schedule Expected Capital Expend (USD billions) Plant Production (Mtpa) Plant Type Cost Per Mtpa (USD millions) Ichthys Phased $4,047 Pluto Phased $3,536 Prelude Vessel $3,500 Wheatstone Phased $3,370 Gorgon Phased $2,933 PNG LNG Phased $2,272 Gladstone Phased $2,051 InterOil Phased $1,160 Page 7

8 Integrated Gulf LNG Project Commercial Map Government owns 22.5% through entire value chain Dry Gas Pipeline Joint Venture Facility Owners $384m LNG Revenue - $14.35 $100/bbl oil price Condensate Revenue - $95 $100/bbl oil price Revenue Condensate Stripping Joint Venture Facility Owners $941m Elk Antelope Joint Venture Resource Owners $277m LNG Joint Venture Facility Owners $6,800m Export Terminal & Common Joint Venture Facility Owners $503m # Excludes sunk costs of circa $600m and any compression costs which might be necessary. Page 8

9 InterOil Gulf LNG Project Modelling Cases Case Train 1: Expected Production Total 4 Mtpa LNG Capacity Timing Plant Capacity - Existing Plan 2016 Initial condensate stripping plants and associated facilities (900 MMscf/d) 4 Mtpa land based LNG plant and associated facilities Train 2: Expected Production Total 8 Mtpa LNG Capacity 2018 Additional condensate stripping plants and associated facilities (total 1,350 MMscf/d) Additional 4 Mtpa land based LNG plant and associated facilities Train 3: Expansion Production Total 12 Mtpa LNG Capacity 2020 Additional condensate stripping plants and associated facilities (total 1,800 MMscf/d) 2009 Project Agreement FID Additional 4 Mtpa land based LNG plant and associated facilities * Require approximately 450 MMscf/d condensate stripping facilities for each 3.0Mtpa LNG Page 9

10 Page 10 Modelled Gulf LNG Fields Resource Reserve Depletion

11 Projected Project Cashflow Cashflow $4-5 billion 8mtpa Cashflow $2-3 billion 4mtpa Page 11

12 Breakdown of the State s Revenue - Expected Case At $100/bbl oil price government cash flow of K172bn ($USD85bn) Page 12

13 InterOil Gulf LNG Project Modelling Assumptions Assumptions Oil Price $100/bbl Recoverable Raw Gas 9.54 tcf Condensate (Discount to Brent) $5/bbl Marketable Condensate MMbbls LNG Prices and Slope $14.35/Mmbtu (based on LNG slope of & beta 0.50) MMbtu/Mcf 1.08 Foreign Exchange Rate USD/Kina 0.50 MMbtu/Ton LNG Royalty & Development Levy 2% MMbtu/bbl 5.8 Corporate Tax Rate 30% Fuel & Loss LNG Condensate Stripping 8.00% 2.95% Annual Inflation 2% Government Ownership 22.5% CGR 5 Year Average CGR 10 Year Average CGR Stage 1 -Life Average 16.8 bbl/mmscf 15.7 bbl/mmscf 13.4 bbl/mmscf All Rights Reserved InterOil 2011

14 Upstream Project Capital and Operating Expenditure Fields Condensate Stripping Facilities Condensate Pipeline LNG Pipeline LNG Land Based Export Terminal & Common TOTAL Train 1 Expected Production [4 Mtpa Land Based LNG] CAPEX $162.0M $460.0M $187.5M $383.7M $3,400.0M $483.0M $5,076M Sunk Costs $551.0M $551.0M Annual OPEX $6.6M $16.0M $5.0M $25.0M $33.0M $31.5M $117.1M Train 2 Expected Production [8 Mtpa Land Based LNG] Incremental CAPEX $115.0M $293.0M - - $3,400.0M $20.0M $3,828M Incremental Annual OPEX $7.0M $3.7M $28.0M $38.7M Train 3 Expansion Production [12 Mtpa Land Based] Incremental CAPEX $90.0M $230.0M - - $3,400.0M $20.0M $3,740M Incremental Annual OPEX $7.0M $2.1M - - $22.0M $8.8M $39.9M Total Development [12 Mtpa Land Based] Incremental CAPEX $367.0M $983.0M $187.5M $383.7M $10,200M $523.0M $12,644M Incremental Annual OPEX $20.6M $21.8M $5.0M $25.0M $83.0M $40.3M $196M # Does include costs of compression expected to be required circa 2027 Page 14

15 Offtake Agreements in Place for Train 1 MTPA Years of Supply HOA signed Noble Group Jul 2011 EWC Philippines Apr 2011 Gunvor Nov 2011 ENN Dec 2011 TOTAL 3.8 Train 1 Page 15

16 InterOil s #1 Priority is Achieving Integrated Gulf LNG FID InterOil is moving ahead towards PNG Government approval of the fully integrated LNG project Development plan and integrated timetable presented to the PNG government departments PNG Government has been presented with economic models and the funding requirements Draft Gas Agreement has been filed with the State PDL license application nearing completion, with environmental studies near completion Geo-technical works completed and site and overall pipeline route selected for the land-based LNG plant and jetty Social mapping for PRL #15 undergoing a final update and final social mapping is underway for pipeline route and LNG site Herd and Hou Creek upstream camps nearing completion for Upstream activities Upstream access road 100% complete from Herd to Elk and Antelope fields and road access between Hou Creek and Elk and Antelope fields is 70% complete Page 16

17 Project Update and Future Milestones InterOil is moving ahead to reach FID CSP facilities re-engineered for increased production volumes are nearing completion Pipelines for natural gas and condensate have been designed to handle the capacities required for our target LNG volumes Continuing LNG pre-investment to lower bidder risks and secure lower project costs LNG off-take HOA signed with; Noble Group for 1 MTPA for 10 years Guvnor for 1 MPTA for 15 years ENN for 1.5 MTPA for 15 years Phillipines Power Project 0.3 MTPA Investment banks appointed to secure World Class Partner and accelerate 8 MTPA LNG production Page 17

18 National Benefits and Content Production to average K13 billion per annum (GDP 40% higher than National Budget forecast for 2011) Exports to increase by K12 billion per annum (80% increase on National Budget forecast for 2011) Contribute around K8 billion in government revenue each year, assuming 22.5% State participation (70% increase on National Budget forecast for 2011) Historical Multiplier effect of LNG on the Region around 3 to 4 times Greatest development opportunity in the history of Gulf Province Approximately 3,000 customary owners stand to gain financial benefits Growth and Development Engine for the Gulf Province and PNG Employment Training & Education Overall Multiplier Effect Page 18

19 Project Site in The Gulf Project agreement provides an alternative site to Napa Napa Bluff location is within area described as alternative sites in the 2009 Project Agreement Advantages to the location in Gulf No need for a USD 1 billion (300 km) submarine pipeline to Port Morseby Gulf LNG project processes Gulf gas in the Gulf Province Socio-economic infrastructure will improve lives of the people of the Gulf Province through: Education Heath Care Power & fuel distribution Training Jobs Port & road development Housing Avoid congestion with the PNG LNG project in NCD and Central Province Page 19

20 InterOil Engages Advisors on Sale of Interest in Resource and Exploration InterOil has retained Morgan Stanley & Co (LLC), Macquarie Capital (USA) Inc. and UBS AG as joint financial advisors to assist InterOil in the selection of an internationally recognized LNG operator to join the InterOil Gulf LNG Project; Selection of the preferred LNG operator will proceed after NEC approvals Accelerate the LNG capacity Possible LNG off-taker Possible participation in InterOil s exploration tenements in Papua New Guinea The timing is right for engaging in partnering process; Strengthening Asian LNG market, >$17/mcf spot prices Company has received proposals from internationally recognized LNG operators Increased interest in exploration and investment in PNG Third annual Elk and Antelope resourse estimate supports LNG project Substantial progress in LNG project engineering and design Opportunity to book proven reserves on declaration of FID Triceratops 2 to add further certified resources in 2012 Page 20

21 Conclusion First LNG by 2016 On track for LNG FID to meet 2009 LNG Project Agreement, with first train of 4 MTPA of LNG in 2016 followed by additional train of 4 MTPA in Future expansion to 12 MTPA. FID Ready: Ready to go to FID as all project segments are financeable, but dependant on PNG Government permits, licenses and land. Proven Technology: InterOil plans to develop proven LNG technology, whose technology will depend on partner selected World Class Design and Construction: World class contractors with track records in LNG: Siemens, Worley Parsons, EDG, CH-IV, HR Wallingford, Mitsui, Hyundai and Toyo Engineering. Operations: InterOil is one of the largest developers of PNG Human Resource talent and will continue this philosophy with the LNG facilities. We will conclude negotiations with an industry partner. Signed HOA for between MTPA LNG off-take: Noble Group (USD50 million sales) 1.0 MTPA Guvnor 1.0 MTPA ENN MTPA Philippines Power Project 0.3 MTPA Page 21

22 Way Forward APPROVAL FOR PROJECT AGREEMENT FID AND GULF LOCATION CONCLUDE LNG EQUITY PARTNER SELL DOWN OBTAIN LAND TITLE AT BLUFF GULF PROVINCE TO START EARLY WORK Portion 334 C Portion 335 C OBTAIN MAIN PERMITS PDL Petroleum Development Licence PLs Pipeline Licences PPFL Petroleum Processing Facility Licence EIR/EIS Environment Studies Page 22