TotalEnergies Advances $14 Billion Papua LNG Project, Plans FID in November

en.Wedoany.com Reported - On September 7, TotalEnergies announced the latest progress schedule for the Papua LNG project. The engineering, procurement, and construction (EPC) tendering process has been completed, and contract award recommendations are pending approval from joint venture partners. Following design optimization and reorganization of the EPC bidding process, the project's estimated capital expenditure has been reduced to approximately $14 billion, representing cumulative savings of nearly $4 billion compared to the plan in place since 2024. TotalEnergies Chairman and CEO Patrick Pouyanné stated that the company currently plans to make the Final Investment Decision (FID) around November 2026.

Papua LNG is planned to utilize resources from the Elk and Antelope gas fields in Papua New Guinea's Gulf Province, with a designed LNG production capacity of approximately 5.6 million tons per year. The project scope encompasses upstream gas production and processing facilities, gas pipelines connecting the fields to liquefaction facilities, and LNG facilities near Port Moresby. According to official project materials, the liquefaction scheme will integrate with existing PNG LNG infrastructure and adopt new electric-driven liquefaction units.

The latest cost reduction primarily stems from two adjustments. The project redesigned the upstream condensate processing scheme to create synergies with existing PNG LNG facilities; simultaneously, the EPC package bidding was reorganized to include more Asian EPC contractors in the bidding scope. These adjustments have reduced total capital expenditure to approximately $14 billion. Recommended EPC contract awards have now been formulated but still require formal approval from all project partners; therefore, at this stage, it cannot yet be stated that EPC contracts have been awarded.

The project's operating structure has also been adjusted accordingly. TotalEnergies has decided to transfer operatorship of Papua LNG to ExxonMobil, which currently operates the adjacent PNG LNG project. TotalEnergies will also sell a 9.1% interest in Papua LNG to existing project partners on a pro-rata basis. Following this equity adjustment and the exercise of back-in participation rights by the Government of Papua New Guinea, the project is expected to be held 34.1% by ExxonMobil, which will serve as operator, 20% by TotalEnergies, 21% by Santos, 2.4% by ENEOS Xplora, and a combined 22.5% by Kumul Petroleum Holdings and MRDC.

The Government of Papua New Guinea and project developers have also completed amendments to the 2019 Gas Agreement, with the revised agreement incorporating the project's latest budget and design optimizations into commercial and fiscal arrangements. The Office of the Prime Minister of Papua New Guinea announced on September 3 that the government's investment incentives for the project are valued at approximately $1.95 billion, alongside an adjustment mechanism linked to project investment returns. The government stated that following the agreement amendments, the project will continue to advance toward FID and subsequent construction preparations.

LNG sales and project financing arrangements have also reached a new milestone. TotalEnergies has established an LNG marketing joint venture with Papua New Guinea state-related entities represented by Kumul Petroleum Holdings, planning to jointly market 2.4 million tons per year of Papua LNG's total output. The parties have also signed an LNG offtake framework agreement, under which TotalEnergies will purchase 1.5 million tons per year of LNG from the marketing joint venture for its global LNG portfolio.

According to the Papua LNG project's official website, the project integrates upstream, midstream, and downstream scopes into a unified development system. The upstream and midstream facilities include gas production, processing, and transportation works; the liquefaction end will connect to existing PNG LNG infrastructure at Caution Bay. With the completion of the EPC bidding process, the Gas Agreement amendments, the operator transition, and the formation of LNG sales arrangements, the project's next key milestones are joint venture partner approval of the recommended EPC awards and the Final Investment Decision.