InterOil Corp. (IOC) fell the most in more than seven months after it received a notice the Papua New Guinea government will cancel a liquefied natural gas project in the country.
InterOil fell 17 percent to $47.66 at 10:08 a.m. in trading in New York. The shares earlier fell 17.5 percent, the most intraday since Oct. 4.
An agreement to build a $6 billion plant will be canceled, according to a copy of a notice from the Department of Petroleum and Energy given to InterOil through an “unofficial channel,” according to a statement today. Cairns, Australia-based InterOil will meet with the Papua New Guinea government this week to discuss the LNG project, Chief Executive Officer Phil Mulacek said on a conference call today.
The project is caught in a political “silly season,” Mulacek said. Papua New Guinea will hold parliamentary elections in late June.
“The prime minister’s office has not shown any intention to cancel the project and we intend to fully abide by the terms of the 2009 agreement,” Mulacek said.
The LNG plant is being built adjacent to InterOil’s refinery and is expected to begin liquefaction by 2015. The company has spent $81 million on its construction.
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