TotalEnergies and Papua New Guinea state entities represented by Kumul Petroleum Holdings have established an LNG marketing joint venture to commercialize part of the planned Papua LNG project’s production, one of several agreements moving the US$14 billion project closer to a final investment decision.
The joint venture will market 2.4 million tonnes per annum (Mtpa) of LNG from Papua LNG’s planned total production capacity of 5.6 Mtpa. TotalEnergies said the arrangement is intended to support financing for the project.
Under a separate LNG offtake Heads of Agreement, TotalEnergies will purchase 1.5 Mtpa from the marketing venture for its global LNG portfolio.
Papua LNG Moves Closer to Final Investment Decision
The marketing agreements are part of a broader series of commercial and contractual milestones announced by TotalEnergies on Monday.
The company said the EPC tendering process has been completed, with contract award recommendations ready for approval by the project’s co-venturers. Design optimization and the rebidding of engineering, procurement and construction packages have generated nearly US$4 billion in cost savings since 2024, bringing estimated project capital expenditure down to approximately US$14 billion.
TotalEnergies has also finalized an amended Gas Agreement with the government of Papua New Guinea reflecting the project’s revised budget and optimization measures.
ExxonMobil to Take Over Operatorship
In another significant change, ExxonMobil will become operator of Papua LNG, replacing TotalEnergies as the companies seek greater integration with the existing PNG LNG project.
As part of the transaction, TotalEnergies will sell a 9.1% interest in Papua LNG to its project partners in proportion to their existing interests. Following the transaction and the Papua New Guinea government’s exercise of its back-in rights, TotalEnergies will retain a 20% stake while maintaining its LNG offtake share.
The resulting ownership structure is expected to consist of ExxonMobil with 34.1% and operatorship, Santos with 21%, TotalEnergies with 20%, ENEOS Xplora with 2.4%, and Kumul Petroleum Holdings and MRDC with a combined 22.5%.
Project Targets Asian LNG Markets
Papua LNG is designed to monetize natural gas from the Elk and Antelope fields in Papua New Guinea’s Gulf Province. The development includes gas-processing facilities, a pipeline connecting the fields with the liquefaction site and LNG infrastructure near Port Moresby.
The project is designed to produce 5.6 Mtpa of LNG, primarily for Asian markets.
TotalEnergies Chairman and CEO Patrick Pouyanné said the agreements represent decisive progress toward a final investment decision and that the transfer of operatorship should allow the project to benefit from synergies with PNG LNG during construction and operations.
The combination of lower projected capital expenditure, the new LNG marketing structure, revised ownership and ExxonMobil’s appointment as operator represents a substantial restructuring of Papua LNG as its partners move the project toward a final investment decision.
