Midstream - Liquefaction.

During 2006, InterOil proposed a project for the potential construction of an LNG plant that would be built adjacent to its refinery. The project targets a facility that would produce up to nine million tons per annum of LNG and condensates. The infrastructure currently being contemplated includes condensate storage and handling, a gas pipeline from the Elk/Antelope field as well as other potential suppliers of gas, and LNG storage and handling. The LNG facility is being designed to interface with InterOil.s existing refining facilities.

Liquid Niugini Gas Limited was established to pioneer production of LNG in Papua New Guinea and will build and operate the gas processing facility delivering LNG and on-shore NGL processing. The proposed LNG plant is a two train plant with a nominal 4 million metric ton per annum processing capacity for each train. The mid-point of current cost estimate for the two-train plant is approximately $6 billion, and first LNG production is anticipated in 2014/2015.

Liquid Niugini Gas shareholders are InterOil Corporation and Pacific LNG Operations Ltd. each of which hold 50 percent of the .A. Class shares with full voting rights. As of June 30, 2009, InterOil held 86.66% of the .B. class or economic shareholding in the Joint Venture Company. InterOil has proposed farming down its interests in Liquid Niugini Gas to an industry partner that would have a controlling interest and take over as operator of the venture and to that effect has retained BNP Paribas Capital (Singapore) Ltd. (BNP) and ABN AMRO Corporate Finance Australia Ltd. as joint financial advisors for the sale of up to a 25% interests in the Elk/Antelope field, the Liquid Niugini Gas Ltd LNG Project and associated liquid natural gas off-take agreements with potential strategic partners.

The proposed LNG development plan is to transport the natural gas produced from the Elk/Antelope field (link to map) to a liquids conditioning plant in the Central Gulf Province where it will undergo treatment. The gas will then be transported to the proposed LNG plant site near the Company.s existing refinery at Napa Napa. InterOil anticipates that the LNG plant will be designed to operate as a tolling facility, while the LNG will be jointly marketed by the upstream owners on behalf of the joint venture.

Papua New Guinea is strategically placed at the heart of the World.s largest LNG market (link to map). The InterOil LNG proposed LNG facility has significant enhanced economics, which include:

• Closeness to vibrant market,

• High deliverability, low cost supply wells,

• Protected geographic region,

• Onshore, near coast,

• InterOil exploration wells (Elk and Antelope) indicate higher productivity than other wells in PNG,

• InterOil's location for its proposed LNG plant is on a favourable site adjoining the InterOil refinery with access to one of the deepest harbour facilities in the region,

• The LNG site is on State owned land and is readily accessible by road currently servicing the refinery.

Follow this link to the Liquid Niugini Gas Ltd. Website