TotalEnergies has announced that Papua LNG has achieved major contractual and commercial milestones, marking decisive steps towards a final investment decision (FID). Thanks to the close co-operation with the authorities of Papua New Guinea and Papua LNG partners, the following key milestones have now been achieved:
- Completion of the EPC tendering process, with contract award recommendations now ready to be approved by the co-venturers. Since 2024, close to US$4 billion cost savings have been achieved through project design optimisation (for example, developing an alternative upstream condensate scheme in synergy with PNG LNG) and rebidding EPC packages with an enlarged panel of Asian EPC contractors, bringing the project CAPEX down to around US$14 billion.
- Decision made to maximise synergies for the benefit of the project by transferring the operatorship to ExxonMobil, operator of PNG LNG. TotalEnergies and ExxonMobil will ensure a safe and efficient transition of operatorship while maintaining continuity of project activities and ongoing commitments to the authorities and stakeholders. Together with the transfer of operatorship, in order to give to ExxonMobil a higher stake in the project, TotalEnergies will sell a 9.1% interest (post back-in of Kumul Petroleum) in the project to its Papua LNG partners, in proportion to their existing participating interests and will retain a 20% interest in the project, while maintaining its LNG offtake share of the project.
- Finalisation of the gas agreement with the Government of Papua New Guinea taking into account this updated budget and optimisation. The gas agreement signed in 2019 has been amended to ensure robust project economics, including in low cycle, while preserving the State's long-term fiscal interests.
- Establishment of a LNG marketing joint venture between TotalEnergies and the PNG State-related entities represented by Kumul Petroleum Holdings Ltd, to jointly commercialise 2.4 million tpy from Papua LNG out of a total production of 5.6 million tpy, thus supporting the project financing.
- Execution of a LNG offtake heads of agreement between TotalEnergies as a buyer and the parties of the LNG marketing joint venture as sellers, providing TotalEnergies with access to 1.5 million tpy of LNG for its own global portfolio.
“These agreements mark decisive step towards the FID 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.”
Upon completion of the farm-down by TotalEnergies of part of its interest and exercise by the State of Papua New Guinea of its back-in right, TotalEnergies will hold a 20% interest in Papua LNG, alongside ExxonMobil (34.1%, operator), Santos (21.0%), ENEOS Xplora (2.4%), and Kumul Petroleum Holdings Ltd and MRDC (22.5%).