TotalEnergies Advances Papua LNG Toward Final Investment Decision

TotalEnergies has announced significant progress on the Papua LNG project in Papua New Guinea, with several major contractual and commercial milestones now completed. The developments represent a decisive step toward reaching the project’s Final Investment Decision (FID), while strengthening its economic competitiveness and long-term commercial prospects.

A major milestone is the completion of the engineering, procurement and construction (EPC) tendering process. Recommendations for awarding the contracts are now ready for approval by the project’s co-venturers. Since 2024, TotalEnergies and its partners have reduced projected costs by nearly US$4 billion through extensive project optimization.

The cost reductions have been achieved through several measures, including redesigning the upstream condensate development strategy to create synergies with the existing PNG LNG project. The partners also rebid EPC packages and expanded participation among Asian engineering and construction contractors. As a result, Papua LNG’s estimated capital expenditure has been reduced to approximately US$14 billion.

Another important decision involves the transfer of project operatorship to ExxonMobil, which already operates the PNG LNG project. TotalEnergies said the move is intended to maximize operational synergies and improve value creation during both construction and production. ExxonMobil and TotalEnergies will work together to ensure a safe transition while maintaining project continuity and commitments to government authorities and stakeholders.

As part of the restructuring, TotalEnergies plans to sell a 9.1% interest in Papua LNG, following the exercise of Papua New Guinea’s back-in right, to the project’s partners in proportion to their existing participating interests. TotalEnergies will retain a 20% stake while maintaining its share of LNG offtake.

The company has also finalized amendments to the Gas Agreement with the Papua New Guinea government. The revised agreement incorporates the lower project budget and optimization measures while strengthening project economics, including during weaker market conditions, while preserving the country’s long-term fiscal interests.

In addition, TotalEnergies and PNG state-related entities represented by Kumul Petroleum Holdings Limited have established an LNG marketing joint venture. The venture will jointly commercialize 2.4 million tonnes per annum (Mtpa) from Papua LNG’s planned 5.6 Mtpa production capacity, supporting project financing.

TotalEnergies has also signed an LNG offtake Heads of Agreement that will provide it access to 1.5 Mtpa for its global LNG portfolio.

Following the planned ownership changes, ExxonMobil will hold 34.1% and operate Papua LNG, while Santos will hold 21.0%, TotalEnergies 20.0%, ENEOS Xplora 2.4%, and Kumul Petroleum Holdings Limited and MRDC 22.5%.

Chemical Commodity Price Impact

The development is positive for LNG and natural gas markets, as Papua LNG moves closer to FID with lower capital costs, stronger commercial arrangements and ExxonMobil’s operational expertise. Once operational, the project is expected to increase LNG supply from Papua New Guinea and strengthen the country’s position as an Asian energy supplier. For chemical commodities tracked by ChemAnalyst, greater LNG availability could eventually ease regional natural gas and feedstock costs, particularly in Asia, although the effect will depend on production timing and global demand. Lower gas costs could support methanol, ammonia, hydrogen and other gas-based chemical production, potentially limiting upward price pressure over the longer term.