Papua LNG has cleared several major development hurdles after its partners reduced the project’s estimated capital cost to about $14 billion and agreed to transfer operatorship to ExxonMobil ahead of a Final Investment Decision (FID).
The changes put the proposed 5.6-million-tonne-per-year (Mtpa) LNG development in Papua New Guinea closer to the construction phase. The partners have completed the tendering process for the project’s engineering, procurement and construction (EPC) packages, with contract award recommendations now awaiting approval.
The latest progress also reshapes the project’s ownership and operating structure. ExxonMobil, which already operates the country’s PNG LNG project, will become operator of Papua LNG, while TotalEnergies will reduce its interest to 20%.
Papua LNG cuts projected cost to $14B
The project partners have brought Papua LNG’s expected capital expenditure down by nearly $4 billion since 2024, reducing the projected cost to around $14 billion.
The reduction follows changes to the development plan and a fresh round of EPC bidding involving a wider group of Asian contractors.
One of the technical changes involves an alternative upstream condensate development scheme designed to create synergies with the existing PNG LNG project.
The lower capital requirement improves the project’s economics as the partners prepare to approve the EPC contracts and move toward FID.
ExxonMobil to take over project operatorship
ExxonMobil will take operatorship of Papua LNG as part of a broader effort to integrate the development with PNG LNG.
The U.S. energy company already operates PNG LNG, giving it an established operating presence in Papua New Guinea. The partners expect the common operating structure to create efficiencies during both construction and the eventual production phase.
TotalEnergies will sell a 9.1% interest in Papua LNG to its project partners following the exercise of Papua New Guinea’s back-in right. It will retain a 20% interest and continue to maintain its LNG offtake share.
After the ownership changes are completed, ExxonMobil will hold 34.1% and operate the project. Santos will hold 21%, TotalEnergies 20%, ENEOS Xplora 2.4%, and Kumul Petroleum Holdings Limited and MRDC will together hold 22.5%.
Government agreement updated
The partners have also amended the Gas Agreement with the Government of Papua New Guinea.
The original agreement, signed in 2019, has been updated to reflect the project’s revised budget and development plan. The amendments are intended to maintain viable project economics under weaker market conditions while protecting the state’s long-term fiscal interests.
The updated agreement removes another major issue standing between the project and FID.
Papua New Guinea has been working toward an investment decision in 2026 as it seeks to advance development of the country’s gas resources and expand its LNG industry.
New LNG marketing structure takes shape
Papua LNG has also established a new LNG marketing joint venture between TotalEnergies and Papua New Guinea state-related entities represented by Kumul Petroleum Holdings Limited.
The joint venture will commercialize 2.4 Mtpa of LNG from the planned 5.6 Mtpa production capacity.
TotalEnergies has separately signed a Heads of Agreement to purchase LNG from the marketing venture. The arrangement will give TotalEnergies access to 1.5 Mtpa for its global LNG portfolio.
The new commercial structure is expected to support financing for the development as the partners move toward the investment decision.
Project will develop Elk and Antelope gas fields
Papua LNG will develop the Elk and Antelope gas fields in Papua New Guinea’s Gulf Province and transport the gas to a new liquefaction development near Port Moresby.
The planned facilities include upstream gas processing, 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, with Asian markets expected to account for most of the demand.
Papua LNG will also operate alongside the existing PNG LNG development. Creating opportunities to share expertise and generate operational synergies between the two projects.
With the EPC tender complete, the capital cost reduced and the gas agreement updated, the project has now entered an important stage ahead of FID.
The next major step is approval of the recommended EPC contracts by the project partners. A positive FID would then allow Papua LNG to move from development and commercial preparation into the construction phase.
LNG developments elsewhere
Papua LNG is entering the market as major LNG developments elsewhere are also expanding global supply. In Qatar, the North Field East LNG project is adding 32 Mtpa of capacity through four new LNG trains, with ExxonMobil and TotalEnergies among its international partners. The $28.75 billion project is part of Qatar’s wider North Field expansion and is designed to increase the country’s LNG production capacity from 77 Mtpa to 110 Mtpa.
The two developments also illustrate the scale of investment now moving through the global LNG sector as producers position new volumes for international markets. Papua LNG’s 5.6 Mtpa output is considerably smaller than North Field East, but its location gives it a strategic position close to major Asian LNG markets.
Papua LNG Project Factsheet
- Location: Gulf Province and Port Moresby, Papua New Guinea
- Project: Papua LNG
- Gas fields: Elk and Antelope
- Planned LNG capacity: 5.6 Mtpa
- Estimated capital cost: About $14 billion
- Cost reduction since 2024: Nearly $4 billion
- Future operator: ExxonMobil
- ExxonMobil ownership: 34.1%
- TotalEnergies ownership: 20%
- Santos ownership: 21%
- ENEOS Xplora ownership: 2.4%
- Kumul Petroleum Holdings Limited and MRDC: 22.5%
- LNG marketing joint venture: 2.4 Mtpa
- TotalEnergies LNG offtake: 1.5 Mtpa
- Current stage: Approaching Final Investment Decision
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