The Papua LNG project has achieved several commercial and contractual milestones as it nears a final investment decision. A significant change in the project structure involves the transfer of operatorship from TotalEnergies to ExxonMobil. This transition is intended to leverage operational synergies with existing regional infrastructure during the construction and development phases. Furthermore, TotalEnergies is looking to reduce the project capital expenditure to about $14 billion.
Under the revised arrangement, ExxonMobil will assume operatorship of Papua LNG project from TotalEnergies. The companies will work together to manage the transition while maintaining ongoing project activities and meeting their commitments to the Papua New Guinea authorities and other stakeholders.
Cost Efficiency and Project Scope
The EPC tendering process has been concluded, with contract award recommendations now awaiting approval from the co-venturers. TotalEnergies said that project design optimization and the rebidding of EPC packages undertaken since 2024 have resulted in nearly $4 billion in cost savings.
Revised Ownership and Stakeholder Agreements
Following the planned back-in by Kumul Petroleum, TotalEnergies will divest a 9.1% interest in the project to existing partners. Under the revised ownership structure, ExxonMobil will hold a 34.1% stake and assume operatorship. TotalEnergies will retain a 20% interest, while Santos will hold 21%, ENEOS Xplora 2.4%, and Kumul Petroleum Holdings Limited along with MRDC will maintain a combined 22.5% stake.
The partners have also updated the 2019 gas agreement with the government of Papua New Guinea to align with the current project budget and design optimizations. Furthermore, a LNG marketing joint venture has been established between TotalEnergies and state-related entities to manage the sale of 2.4 million tonnes per annum (Mtpa) of the planned 5.6 Mtpa total output. Additionally, TotalEnergies has secured an agreement to purchase 1.5 Mtpa from the marketing joint venture for its global LNG portfolio.
Infrastructure and Production Targets
“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 project is planned to produce 5.6 Mtpa of LNG using gas resources from the Elk and Antelope fields in Gulf Province. The project will comprise gas processing facilities, a pipeline connecting the fields with the liquefaction facility, and LNG infrastructure located near Port Moresby.
