(EnergyAsia, August 31 2012, Friday) — Papua New Guinea government has suspended its May 14 2012 notice of intention to cancel an agreement to jointly develop a liquefied natural gas (LNG) project with Liquid Niugini Gas Limited, said Houston, Texas-based InterOil Corp which owns a 47.5% stake in the company.

The suspension of the 2009 agreement for the US$6-billion project by the Minister of Petroleum and Energy, William Duma triggered a six-month consultation period for the parties to resolve issues brought up by the government.

Last September, Mr Duma criticised InterOil for submitting a “small and fragmented” proposal, rather than what he called a world-class project, to develop the country’s natural gas reserves for export. He had expressed concerns that InterOil did not appoint an “internationally reputable” company to operate the complex.

Since the notice was received, InterOil said it has held “constructive meetings” with PNG officials from the Petroleum and Energy, Treasury and Justice Departments.

“Negotiations between the government and InterOil will continue with a view to finalising detailed specifications of the proposed LNG project satisfactory to the state. The suspension of the notice will remain in place until the National Executive Council has approved the final concept of the project,” said InterOil.

Located beside an oil refinery that Interoil owns and operates, the proposed complex is designed to process natural gas into LNG for export, mostly to Asia, when it starts up in 2015. Pacific LNG Operations Ltd owns the majority 52.5% of Liquid Niugini Gas Limited.