PETROMIN NEWS

Statement By Joshua Kalinoe, Managing Director and CEO of Petromin on The Occasion of Flaring Antelope One Gas Well

Firstly, I would like to congratulate our partner and operator of the ELK/Antelope field InterOil Corporation for successfully drilling and flaring the Antelope-1 well. This brings to three, the number of successful wells in the Elk/Antelope structure and I am confident that the two other appraisal wells of Antelope -2 and Elk-3 will be just as successful.

Through the Operator, we will soon be commencing drilling in Antelope #2, followed by Elk-3.

The volume of the gas flared today set international records for onshore gas rates, which was independently measured at 545 Million Cubic Feet Per Day (MMCFPD), as a dry rate, and then conservatively adjusted for the 5,000 Barrels Per Day of Condensate (BCPD). The effective rate after adjusting for condensate was 382 MMCFPD with 5,000 BCPD). It confirms the seismic data what Petromin’s geologists and reservoir engineers have independently verified – that the gas column at Antelope-1 well is massive by any measures at over 769 meters of gas and gas liquids.

For Petromin, this is our single largest petroleum investment and as an exploration and development company, we are a risk taker. However, at the same time we are a risk conscious company and we have developed an internal risk assessment and management criteria which allow us to manage our risks in a responsible way. The record capacity of 17.7 billion cubic feet of gas per day through the Antelope-1 well proves our investment capacity and program for success.

The Board and management made the decision to farm-in on the Elk/Antelope project after going through this risk assessment process. When we signed the Investment Agreement with InterOil in October last year, our geologist and reservoir engineers assessed the risk and made the observation that the Elk/Antelope field is less risky and highly prospective and recommended the farm-in arrangement..

This 2nd LNG project for PNG is unique and innovative in many ways. Firstly, it is disintegrated in that the upstream will be operated and managed separately from the midstream by InterOil. The upstream parties which at present comprises InterOil Corporation, Petromin and Pacific LNG of Clarion Finanz, will sell the gas to the LNG plant which will be owned by the upstream parties, including Petromin and other strategic investors. So revenue for the upstream parties will be immediately realized at the extraction point. Those who choose to be in the midstream will further benefit from the LNG revenue as well.

Secondly, there is a lot of flexibility on how the project will eventually be structured so that InterOil, can bring in strategic partners to underwrite the LNG project. Both Petromin and InterOil are currently engaged in serious discussion with a number of potential partners in Europe, Asia and the United States, who will not only bring in the technical skills and financial strength required to underpin the project but will be the operator in the midstream as well. We expect to make an announcement on this strategic partner or partners to join the project within the next two to three months.

Thirdly, all the high quality condensate will be sold to the InterOil Refinery in Port Moresby, adding more value to the Papua New Guinea economy. The condensate extraction is planned to commence in 2010. So some benefits will accrue to the project partners years before the actual gas is sold as LNG.

Fourthly and perhaps most importantly for Petromin, the people of Papua New Guinea and the State, the innovative and competitive approach to project financing that we are currently pursuing collectively with InterOil and Pacific LNG will ensure that no State assets will be sold or swapped to finance the State’s equity. In fact Petromin with the support of InterOil and Pacific LNG is working on a financing structure that would ensure that State’s full 20.5% equity in the upstream and 10% in the midstream will not be diluted either directly or indirectly. We are determined to ensure that the State and people of PNG maximize their gains from this project both through the revenue stream as well as through technology transfer.

Petromin and InterOil have forged a very solid long term strategic commercial partnership. This position will soon be further strengthened when a major strategic partner joins the project to supply the Asian LNG market for decades ahead.

In this regard, I am happy to announce that InterOil and its downstream partners have agreed for Petromin to co-market its share of the LNG. This will make Petromin a fully integrated petroleum company in which Papua New Guineans will for the first time be given the opportunity to participate in the full value chain of the LNG business. This is what our political leaders envisaged when Parliament created Petromin in 2007. InterOil has now made it possible for this vision to be realized.

We are determined to promptly deliver the 2nd LNG project to Papua New Guineans on schedule in 2014 and the operator, InterOil has commenced the pre-FEED process, including contractor identification, financing, marketing, landowner study, and environmental study. Work is in advanced stages in putting together the PDL application. We want to thank the Minister for the announcement today at the Antelope-1 flaring that he has Declared the Location of the gas find and extended the PPL by another five years. This no doubt will now allow us and the operator to finalise the PDL application for his consideration and approval and expand the drilling operations.

We know that the project has the unequivocal support of the Prime Minister and our political leaders, especially members of Cabinet. Accordingly we look forward to the project being given priority consideration as far as regulatory and statutory approvals are concerned. In fact, we a pleased to note that the approval process for the LNG Project Agreement for the liquefaction plant is progressing well. We understand that the Ministerial Gas Committee is given it the fullest attention. We now got the gas, international LNG recognition, and all we need is the LNG Project Agreement to be approved so that we meet the construction deadline.

In conclusion, like Petromin, InterOil’s investment are all in Papua New Guinea. Phil Mulacek, Christian Vinson and the Board of InterOil and Mr. Carlo Civelli of Pacific LNG, must be congratulated for their perseverance and confidence they have shown in Papua New Guinea. Their efforts have now lead to the discovery of what appears to be the largest gas reservoir in Papua New Guinea. Petromin has made a strategic commercial decision to be a partner through a farm-in arrangement and we are happy to be part of this descovery. The decision by Petromin has put the State and the people of Papua New Guinea in the driver’s seat to determine a win, win situation for Papua New Guineans and the project partners, including InterOil.

I am excited about this huge high quality discovery and the prospects it will bring in transforming Petromin into what it was set up to be - a fully integrated national oil and gas company. On a more personal note, the more I deal with Phil and Christian, I am beginning to realize that InterOil’s commitment to Papua New Guinea makes it look like a truly quasi national company.

Prime Minister, Lady Veronica, Government Ministers, ladies and gentlemen, may I invite you to join me in a toast for the success of the partnership between InterOil and Petromin and for what appears to be the largest gas reservoir ever discovered in Papua New Guinea.