$350m refinery

PNG could start $350m refinery by 2000

By Andrew Hobbs

PAPUA New Guinea could have its own oil refinery operating by 2000 if the projects Canadian-based backers, Inter Oil Corp, manage to secure financing by the end of March this year.

Inter Oil chief financial officer Andy Martin said the group was talking to a short list of three banks. ‘The focus was initially on about six banks, and we are in serious discussions with three,” Mr Martin said.

Inter Oil has been looking for financing for the US$2l9 million (As3som) project primarily in Australia but it has also looked in Europe and the Americas after US oil giant Enron reduced its manage ment interest in and financial support for the project in early 1998.

Inter Oil already owns the 36,000 bar

rels-a-day capacity refinery, which it plans

to install at Port Moresby in Papua New Guinea but needs to raise around US$l65 million in total debt to proceed with the

project.

Mr Martin said it was targeting a US$l3O million term debt facility and a US$35 million working capital facility.

The rest of the development funding would be made up of US$5l million of equity value in equipment and a further US$39 million in cash.

Inter Oil has been working on installing the refinery in PNG since it acquired it in 1991 from Chevron.

While the refinery itself is second hand, it was previously installed in Alaska, Inter Oil will completely rebuild and upgrade the machinery at its base in Houston, Texas, before it is moved to PNG. Once financing is secured, Mr Martin said it would take some 20-22 months to ship and erect it in PNG.

The refinery plans to process PNG crude oil shipped in from Kutubu and Gobe oil fields, but Mr Martin said it would also consider importing some oil if that was necessary.

Mr Martin said those two PNG fields would be able to supply the refinery for 10 years at least.

The refinery would use some 36,000 barrels of oil a day to produce 34,500 bar rels of finished product, 55 per cent of which would be used to supply the domes tic PNG market.

Mr Martin said Inter Oil thought domestic demand would be some 17,000 barrels of oil a day in 2000, up from

15,500 today.

The remainder of the oil produced at the refinery would be exported to Pacific basin markets, including Townsville and Caims.

Inter Oil has already obtained letters of intent to buy oil for over 70 per cent of its

planned output.

Inter Oil also has an interest in some upstream oil projects in PNG, including a 20 per cent stake in the Stanley wildcat well that was due to be spudded late December. The Stanley well is operated by Santos Ltd. (AAP) ■