TotalEnergies has announced the achievement of several major contractual and commercial milestones for the Papua LNG project in Papua New Guinea, bringing the natural gas development closer to a Final Investment Decision (FID). The progress follows continued cooperation between the Government of Papua New Guinea, TotalEnergies and the project’s co-venturers to optimise project costs, strengthen commercial arrangements and improve long-term economics.
The Engineering, Procurement and Construction (EPC) tendering process has been completed, with contract award recommendations now ready for approval by the project’s co-venturers. Since 2024, the project has achieved close to US$4 billion in cost savings through design optimisation and the rebidding of EPC packages with an expanded group of Asian contractors. These measures have reduced estimated project capital expenditure to approximately US$14 billion.
As part of the project optimisation, a decision has also been taken to transfer operatorship of Papua LNG to ExxonMobil, which operates the neighbouring PNG LNG project. The move is expected to create synergies during construction and operations while supporting efficient project execution. TotalEnergies and ExxonMobil will work together to ensure a safe and orderly transition while maintaining continuity of activities and commitments to government authorities and other stakeholders.
In connection with the operatorship transfer, TotalEnergies plans to sell a 9.1% interest in Papua LNG, following the exercise of the State’s back-in right, to the project partners in proportion to their existing participating interests. TotalEnergies will retain a 20% stake in the project while maintaining its LNG offtake share.
The Gas Agreement with the Government of Papua New Guinea has also been finalised. The agreement originally signed in 2019 has been amended to reflect the updated project budget and optimisation measures, while strengthening project economics across different market conditions and preserving the country’s long-term fiscal interests.
Another key milestone is the establishment of a joint LNG marketing venture between TotalEnergies and Papua New Guinea state-related entities represented by Kumul Petroleum Holdings Limited. The venture will jointly market 2.4 million tonnes per annum (Mtpa) of LNG from Papua LNG, out of the project’s planned 5.6 Mtpa production capacity. TotalEnergies has also signed an LNG offtake Heads of Agreement under which it will have access to 1.5 Mtpa of LNG for its global portfolio. Patrick Pouyanné, Chairman and CEO of TotalEnergies, said the agreements represent decisive progress towards FID and highlighted the benefits of ExxonMobil’s operatorship in leveraging synergies with PNG LNG.
Papua LNG will develop gas resources from the Elk and Antelope fields in Papua New Guinea’s Gulf Province. The project is designed to include gas processing facilities, a pipeline and LNG infrastructure near Port Moresby, primarily serving Asian markets. The development is expected to support employment, local businesses, skills development and the growth of Papua New Guinea’s gas industry.
