TotalEnergies Advances Papua LNG Toward Final Investment Decision
TotalEnergies has announced that its Papua LNG project in Papua New Guinea has reached several major contractual and commercial milestones, bringing the integrated liquefied 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 improve project economics, optimize development plans, and establish a framework for long-term commercial success.
The latest developments include the completion of the engineering, procurement, and construction (EPC) tendering process, a decision to transfer project operatorship to ExxonMobil, the amendment of the Gas Agreement with the government, and the creation of a new LNG marketing joint venture. Together, these measures are intended to strengthen the project’s competitiveness and support the financing required to move Papua LNG into its next phase.
EPC Tendering Process Completed
One of the most significant milestones is the completion of the EPC tendering process. Contract award recommendations are now ready for approval by the project’s co-venturers, marking an important step toward finalizing the construction strategy and associated investment commitments.
TotalEnergies said that close to US$4 billion in cost savings have been achieved since 2024. These savings have resulted from a combination of project design optimization and a more competitive procurement process. One example of the optimization is the development of an alternative upstream condensate scheme designed to create synergies with the existing PNG LNG project.
The EPC packages were also rebid with an enlarged panel of Asian EPC contractors. This broader approach to procurement has helped improve cost competitiveness and contributed to bringing Papua LNG’s estimated capital expenditure down to approximately US$14 billion.
The reduction in capital costs is expected to improve the project’s economic resilience and strengthen its ability to proceed under a range of market conditions. The completion of the tendering process also provides greater visibility into the construction costs and execution requirements that will underpin the final investment decision.
Operatorship to Transfer to ExxonMobil
Another major decision concerns the future operatorship of Papua LNG. TotalEnergies and its partners have agreed to maximize project synergies by transferring operatorship to ExxonMobil, the operator of the existing PNG LNG project.
The transfer is intended to leverage ExxonMobil’s experience and operational infrastructure in Papua New Guinea. By aligning the operatorship of the two developments, the partners expect to identify efficiencies during both construction and operations, while supporting a safe and coordinated execution strategy.
TotalEnergies and ExxonMobil will work together to ensure a smooth transition of operatorship. The companies have emphasized the importance of maintaining continuity across project activities and honoring ongoing commitments to the Government of Papua New Guinea and other stakeholders.
As part of the operatorship transition, TotalEnergies will also sell a 9.1% interest in Papua LNG to its project partners, following the exercise of the State’s back-in right. The transaction is intended to provide ExxonMobil with a higher participating interest in the project while allowing the other partners to acquire additional interests in proportion to their existing holdings.
Following the completion of the farm-down and the State’s back-in, TotalEnergies will retain a 20% interest in Papua LNG. Despite reducing its participating interest, the company will maintain its LNG offtake share from the project, preserving its access to future production for its global LNG portfolio.
Gas Agreement Amended to Support Project Economics
The partners have also finalized amendments to the Gas Agreement with the Government of Papua New Guinea. The original agreement was signed in 2019 and has now been updated to reflect the project’s revised budget, optimized development plan, and current commercial framework.
The amended agreement is designed to ensure robust project economics, including during periods of lower LNG prices or weaker market conditions. At the same time, the agreement preserves the State’s long-term fiscal interests, balancing the need to support investment with the government’s expectations for future revenues.
The finalization of the Gas Agreement represents a critical contractual milestone for Papua LNG. A stable and commercially viable fiscal framework is essential for securing financing, confirming project commitments, and progressing toward the Final Investment Decision.
New LNG Marketing Joint Venture Established
In addition to the construction and fiscal agreements, TotalEnergies and PNG State-related entities represented by Kumul Petroleum Holdings Limited have established an LNG marketing joint venture.
The joint venture will jointly commercialize 2.4 million tonnes per annum (Mtpa) of LNG from Papua LNG. This volume forms part of the project’s expected total production capacity of 5.6 Mtpa and is intended to support the project’s financing structure.
The arrangement provides a framework for the participating parties to work together on LNG sales and marketing activities. By combining their commercial interests, the partners aim to strengthen market access and improve the project’s ability to secure long-term buyers.
A separate LNG offtake Heads of Agreement has also been executed between TotalEnergies, acting as a buyer, and the parties to the LNG marketing joint venture, acting as sellers. Under the agreement, TotalEnergies will have access to 1.5 Mtpa of LNG for its own global portfolio.
This offtake arrangement is expected to support TotalEnergies’ long-term LNG supply strategy and provide additional flexibility in serving customers across international markets.
Papua LNG Positioned for the Next Development Stage
Commenting on the milestones, Patrick Pouyanné, Chairman and CEO of TotalEnergies, said the agreements represent decisive steps toward the Final Investment Decision for Papua LNG.
He highlighted the transfer of operatorship to ExxonMobil as a measure that would enhance value creation and competitiveness by leveraging synergies with PNG LNG during construction and operations. Pouyanné also noted that Papua LNG would enable TotalEnergies to secure significant LNG volumes in a strategic location, supporting energy supply diversification across fast-growing Asian markets.
The CEO thanked the Government of Papua New Guinea, led by Prime Minister James Marape, for its continued support and contribution to achieving the latest milestones.
Updated Project Ownership
Once TotalEnergies completes the farm-down of part of its interest and the State of Papua New Guinea exercises its back-in right, the ownership structure of Papua LNG will be updated.
ExxonMobil will hold a 34.1% interest and serve as operator, while TotalEnergies will retain 20%. Santos will hold 21.0%, ENEOS Xplora will hold 2.4%, and Kumul Petroleum Holdings Limited and MRDC will collectively hold 22.5%.
The revised ownership structure, combined with the completed EPC tendering process, amended Gas Agreement, and new LNG marketing arrangements, provides Papua LNG with a stronger foundation for the next stage of development.
The project’s progress reflects the partners’ efforts to improve cost competitiveness, strengthen commercial arrangements, and establish a more resilient investment framework. With these milestones achieved, Papua LNG is positioned to advance toward its Final Investment Decision, subject to the necessary approvals and remaining project commitments.
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