$14 billion Papua LNG project moves forward

ExxonMobil will take over operatorship of the proposed $14 billion Papua LNG project as the development moves closer to a final investment decision (FID), TotalEnergies said.

Papua LNG is designed to produce 5.6 million tonnes per annum (mtpa) of LNG from the Elk and Antelope gas fields in Papua New Guinea’s Gulf Province. The development includes upstream gas processing facilities, a pipeline connecting the fields with the liquefaction site and LNG infrastructure near Port Moresby.

TotalEnergies said the project’s engineering, procurement and construction (EPC) tendering process has been completed, with contract award recommendations ready for approval by the project partners.

The company said project optimization and a new round of bidding have reduced expected capital expenditure to approximately $14 billion, nearly $4 billion below previous estimates.

Cost reductions since 2024 have included changes to the project design, including an alternative upstream condensate scheme that takes advantage of synergies with the existing PNG LNG project. EPC packages were also rebid to a larger group of Asian contractors.

As part of efforts to further integrate Papua LNG with PNG LNG, TotalEnergies and its partners have agreed to transfer operatorship of the project to ExxonMobil, which operates PNG LNG.

TotalEnergies said the change is intended to capture additional synergies between the two projects during construction and operations.

TotalEnergies will also reduce its ownership interest by selling a 9.1% stake, following the exercise of the Papua New Guinea government’s back-in rights, to the other Papua LNG partners in proportion to their existing interests.

Following the transactions, ExxonMobil will hold a 34.1% interest and serve as operator. TotalEnergies will retain 20%, Santos 21%, ENEOS Xplora 2.4%, and Kumul Petroleum Holdings Ltd. and Mineral Resources Development Co. will collectively hold 22.5%.

TotalEnergies said it will maintain its LNG offtake share despite reducing its equity interest.

“These agreements mark decisive steps towards the Final Investment Decision of Papua LNG,” TotalEnergies Chairman and CEO Patrick Pouyanné said. “The transfer of operatorship enhances the project’s value creation and competitiveness by leveraging the synergies with PNG LNG during construction and operations phases.”

The project partners have also finalized amendments to a gas agreement originally signed with the Papua New Guinea government in 2019. TotalEnergies said the revised agreement reflects the lower project budget and other optimization measures.

TotalEnergies and Papua New Guinea state-related entities represented by Kumul Petroleum have also established an LNG marketing joint venture that will jointly commercialize 2.4 mtpa of Papua LNG’s planned 5.6 mtpa production. The arrangement is intended to support project financing.

Under a separate heads of agreement, TotalEnergies will purchase 1.5 mtpa from the marketing venture for its global LNG portfolio.

Papua LNG is expected to primarily supply Asian markets. TotalEnergies did not provide a target date for FID or the start of LNG production in its announceme