Papua LNG has reached a series of commercial and contractual milestones ahead of a final investment decision (FID), including a transfer of operatorship from TotalEnergies to ExxonMobil and a reduction in estimated project capital expenditure to around $14 billion.
The EPC tendering process has been completed, with contract award recommendations ready for approval by the co-venturers. TotalEnergies said project design optimization and the rebidding of EPC packages since 2024 have generated close to $4 billion in cost savings.
As part of the revised structure, ExxonMobil will take over operatorship of Papua LNG from TotalEnergies, with the two companies to manage the transition while continuing project activities and commitments to the Papua New Guinea authorities and stakeholders.
TotalEnergies will also sell a 9.1% interest in the project, after the planned back-in by Kumul Petroleum, to the other Papua LNG partners in proportion to their existing participating interests. Following the transaction and the State's back-in, TotalEnergies will retain a 20% stake, while maintaining its LNG offtake share.
The revised ownership structure will leave ExxonMobil with 34.1% and operatorship, Santos with 21%, ENEOS Xplora with 2.4%, and Kumul Petroleum Holdings Limited and MRDC with a combined 22.5%.
The partners have also finalized an amended gas agreement with the government of Papua New Guinea, updating the 2019 agreement to reflect the revised budget and project optimization.
A LNG marketing joint venture has been established between TotalEnergies and Papua New Guinea state-related entities represented by Kumul Petroleum Holdings Limited to jointly market 2.4 million tonnes per annum from Papua LNG's planned total output of 5.6 Mtpa.
TotalEnergies has separately signed a heads of agreement to purchase 1.5 Mtpa from the marketing joint venture for its global LNG portfolio.
“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
Papua LNG is designed to produce 5.6 Mtpa of LNG from gas resources in the Elk and Antelope fields in Gulf Province. The development includes gas processing facilities, a pipeline linking the fields to the liquefaction site and LNG infrastructure near Port Moresby.