TotalEnergies has announced a series of major contractual and commercial milestones for Papua LNG, moving the Papua New Guinea liquefied natural gas project closer to a final investment decision.
The project has completed its EPC tendering process, with contract award recommendations now ready for approval by the co-venturers.
Through project design optimization and a new round of bidding for engineering, procurement and construction packages, Papua LNG has achieved nearly $4 billion in cost savings since 2024, reducing estimated project capital expenditure to approximately $14 billion.
The savings have included development of an alternative upstream condensate scheme that creates synergies with the existing PNG LNG project and the rebidding of EPC packages to a broader group of Asian contractors.
The partners have also decided to transfer operatorship of Papua LNG to ExxonMobil, which already operates PNG LNG.
TotalEnergies said the change is intended to maximize construction and operating synergies between the two projects while improving Papua LNG’s competitiveness and value creation.
TotalEnergies and ExxonMobil will coordinate the transition while maintaining continuity across project activities and commitments to government authorities and other stakeholders.
As part of the operatorship change, TotalEnergies will sell a 9.1% interest in Papua LNG, calculated after the exercise of Kumul Petroleum’s back-in rights, to existing project partners in proportion to their current ownership stakes.
Following the transaction and the Papua New Guinea government’s exercise of its back-in right, TotalEnergies will retain a 20% interest in Papua LNG.
ExxonMobil will own 34.1% and serve as operator, while Santos will hold 21%, ENEOS Xplora 2.4%, and Kumul Petroleum Holdings Limited and MRDC will collectively hold 22.5%.
Despite reducing its equity interest, TotalEnergies will maintain its existing LNG offtake share from the project.
Papua LNG has also finalized an amended Gas Agreement with the Government of Papua New Guinea.
The original agreement was signed in 2019 and has now been updated to reflect the project’s revised budget and design optimization.
The revised framework is intended to improve project economics, including under lower commodity-price scenarios, while preserving the state’s long-term fiscal interests.
Another major commercial milestone is the establishment of an LNG marketing joint venture between TotalEnergies and Papua New Guinea state-related entities represented by Kumul Petroleum Holdings Limited.
The joint venture will jointly commercialize 2.4 million tonnes per annum of LNG from Papua LNG’s planned total production capacity of 5.6 Mtpa.
TotalEnergies has also signed an LNG offtake Heads of Agreement with the marketing joint venture.
Under that agreement, TotalEnergies will purchase 1.5 Mtpa of LNG for its global portfolio.
The marketing arrangements are expected to support financing of the project while securing long-term LNG volumes for TotalEnergies.
Papua LNG is being developed to monetize natural gas from the Elk and Antelope fields in Papua New Guinea’s Gulf Province.
The development will include gas processing facilities, a pipeline connecting the fields to the liquefaction site and LNG infrastructure near Port Moresby.
The project is designed to produce 5.6 Mtpa of LNG, with Asian markets expected to be the primary destination.
TotalEnergies said Papua LNG is strategically positioned to help diversify energy supplies across fast-growing Asian markets.
The company also expects the project to contribute to Papua New Guinea through employment, local business opportunities, development of domestic capabilities and expansion of the country’s gas industry.
With the EPC process completed, revised capital costs established, operatorship arrangements agreed, the Gas Agreement amended and LNG marketing structures taking shape, Papua LNG has moved significantly closer to a final investment decision.
KEY QUOTE:
“These agreements mark decisive step towards the Final Investment Decision of Papua LNG. The transfer of operatorship enhances the project’s value creation and competitiveness by leveraging the synergies with PNG LNG during construction and operations phases. Papua LNG will enable the Company to secure significant LNG volumes, strategically located to support energy supply diversification across fast-growing Asian markets,” said Patrick Pouyanné, Chairman and CEO of TotalEnergies. “I want to thank the Government of Papua New Guinea, led by Prime Minister James Marape, for its continuous support, instrumental in achieving these major milestones.”
Patrick Pouyanné, Chairman and CEO of TotalEnergies
