“We welcome the ICCC’s decision which now allows us to go forward in building our downstream business in PNG. The purchase of Shell PNG will complement our existing assets and introduce improved efficiencies in our downstream business segment,” InterOil chief executive Phil Mulacek said.
The deal, agreed to in-principle by both parties, was originally announced in November last year. But no financial details of the transaction have been revealed.
If approved the transaction would make the TSX-listed company PNG's largest distributor of petroleum products. But it still requires approval by other PNG government regulators.
Earlier this month, Shell PNG employees had threatened industrial action if the sale went ahead. Senior Shell employees allegedly told the Post-Courier they would shut down the company’s depots and order the 160-strong workforce to not come to work.
Shell’s major customer is national air carrier Air Niugini.
InterOil owns PNG’s only petroleum refining facility, providing the entire domestic refined product need for the country. The refinery’s nominal capacity is 32,500 barrels per day that the company said is “sized to meet the current and predicted demand for the whole of the PNG market”.
InterOil has an agreement with the PNG government ensuring that the domestic distributors purchase all of their petroleum products from the refinery at a controlled price.
Meanwhile, InterOil also holds upstream exploration licences in PNG with drilling recently starting on the Elk-1 exploration well within PPL-238. The company said it plans to drill the well to a depth of 3000m, which is expected to take up to 90 days.
InterOil launched a $US125 million exploration program in PNG last year.
