This Oil Company Got Exactly What It Neededhttp://www.fool.com/investing/general/2013/05/26/this-oil-company-got-exactly-what-it-needed.aspx Tyler Crowe
May 26, 2013
For a couple of months now, we've been anticipating an annoucement from InterOil (NYSE: IOC) to see whom it will select as its operations partner. Well, based on what ExxonMobil (NYSE: XOM) has said recently, it appears that our wait is just about over.
Exxon has just announced that it's in exclusive talks with InterOil and its partner Pacific LNG Group to purchase a working interest in InterOil's Elk and Antelope fields. The deal would also involve selling some of the gas at these fields to Exxon's LNG export terminal that's currently under construction and is expected to make its first shipments in 2014. The deal is not yet completed and will need to receive approval of the Papua New Guinea government.
Another element working in the favor of InterOil is its location. Not only is China a major LNG importer, but shipments from Papua New Guinea could also bypass the Strait of Malacca, one of the world's most significant oil transit bottlenecks. The strait that separates Indonesia and Singapore sees oil volumes of about 15 million barrels per day and is a high-risk zone for potential spills, groundings, and hijackings. Any Asian market supplier that doesn't need to use this channel is in high demand, because it eases any supply shortages if anything were to happen there.
Happy to be stuck with you
Another added benefit of teaming up with Exxon is that it already has an LNG facility in the works and has contracts to supply Sinopec and PetroChina's state-run parent company, CNPC. The