InterOil Corporation today provided an update on its efforts to commercialize the previously announced Elk natural gas and condensate discovery in Papua New Guinea.

In a recent statement, the Government of Papua New Guinea endorsed InterOil’s liquefied natural gas (LNG) project proposal and recommended to proceed to the next phase – finalizing a project agreement, which will establish the framework for developing the regulatory, licensing and fiscal requirements for the project.

“We are excited to have received support from the Government. It is apparent that they recognize how advanced our LNG project is and the benefits of utilizing existing infrastructure,” said InterOil Chairman and CEO Phil Mulacek.

“We share the Government’s belief that their actions are an important step for the country in becoming a world-scale LNG producer,” Mulacek added.

InterOil has completed the preliminary engineering and evaluation design work, and an evaluation of potential contractors for the project. The LNG facility is planned to be built adjacent to the company’s refinery where operational synergies can be achieved.

The current project design consists of a liquefaction plant with capacity up to 9 million tons per year of LNG from two processing trains, condensate and gas liquid processing, handling and storage facilities, and a 36-inch natural gas pipeline from supply sources. First supply of LNG is targeted to commence by 2012.