GAIL in talks with Interoil for stake in New Guinea gas plant

NEW DELHI: State-run gas utility GAIL India on Monday said it is talking to Interoil Corp for a possible stake in the Canadian oil firm's proposed liquefied natural gas project in Papua New Guinea.

"We are still talking to them. Nothing has been concluded as yet," GAIL Chairman and Managing Director B C Tripathi told.

Papua New Guinea, an island in the Southwestern Pacific ocean, last year granted initial approvals for its second LNG project, which would follow a plant proposed by an Exxon Mobil Corp-led venture.

The venture would cost about USD 5 billion for a plant producing 3.5 million tonnes a year of LNG, with shipments due to start in 2014.

Asked about reports that GAIL's talks with InterOil Corp had run into trouble over pricing issues, he said, "Talks are still on... it is at a preliminary stage."

Tripathi did not say what percentage of stake could GAIL get in the project. "I cannot say what stake GAIL can get. We are still talking to them on all these issues."

The Canadian company is believed to have asked GAIL for a 'resource payment' of USD 5.03 million apart from equity contributions as strategic investors. GAIL finds the asking price too high.

LNG is natural gas chilled to liquid form for transportation by tankers to destinations not connected by pipeline.

China National Offshore Oil Corp - China's biggest offshore petroleum explorer, is already working with Interoil and the Papua New Guinea-owned Petromin PNG Holdings on commercial terms for financing the government's stake in the project.

It is, however, not clear if China National Offshore Oil Corp, the Beijing-based parent of the Hong Kong-listed Cnooc, would take a stake in the project.