TotalEnergies has taken a series of major steps toward a final investment decision on the Papua LNG project in Papua New Guinea, cutting estimated capital expenditure to around $14 billion and agreeing to transfer operatorship to ExxonMobil.
The French energy major said project optimization and a new round of engineering, procurement and construction tenders have generated close to $4 billion in cost savings since 2024. The reductions include changes to the upstream condensate development and increased integration with the existing PNG LNG infrastructure, as well as rebidding work to a broader group of Asian EPC contractors.
Contract award recommendations have now been prepared but still require approval from the Papua LNG partners.
In another major change, ExxonMobil will become operator of Papua LNG, expanding the U.S. major’s role in Papua New Guinea’s LNG sector. Exxon already operates the neighboring PNG LNG project, which began production in 2014 and represents a $19-billion investment. TotalEnergies said consolidating operatorship should create construction and operating synergies between the two developments.
TotalEnergies will also sell a 9.1% interest in Papua LNG to its project partners following the PNG state’s back-in, reducing its stake to 20%. ExxonMobil will hold 34.1% and serve as operator, while Santos will own 21%, ENEOS Xplora 2.4%, and PNG state-related entities Kumul Petroleum and MRDC a combined 22.5%.
Despite reducing its equity stake, TotalEnergies will retain its existing share of LNG offtake.
The partners have also finalized amendments to the project’s 2019 gas agreement with the Papua New Guinea government to reflect the revised development plan and lower capital budget.
Separately, TotalEnergies and PNG state entities have created an LNG marketing joint venture that will commercialize 2.4 million tonnes per year from Papua LNG’s planned total production of 5.6 million tonnes per year. TotalEnergies has signed a heads of agreement to purchase 1.5 million tonnes per year from that venture for its global LNG portfolio.
The commercial arrangements could help underpin financing for Papua LNG, which is intended to develop the Elk and Antelope gas fields and supply LNG primarily to Asian buyers.
The latest moves bring the project closer to a long-awaited investment decision, although TotalEnergies has not yet announced an FID. Santos said in July that Papua LNG remained on track for an FID decision in the fourth quarter of 2026.
If sanctioned, Papua LNG would become another major LNG development in Papua New Guinea alongside ExxonMobil-operated PNG LNG, strengthening the country’s position as a gas supplier to Asia.