TotalEnergies says Papua LNG has reached several major contractual and commercial milestones, bringing the $14 billion project closer to a Final Investment Decision (FID).

The company said the engineering, procurement and construction (EPC) tendering process has been completed, with contract award recommendations awaiting approval from project partners.

Project optimisation and the rebidding of EPC packages with a wider group of Asian contractors have generated nearly $4 billion in savings since 2024, reducing estimated capital expenditure to around $14 billion.

TotalEnergies and its partners have also agreed to transfer operatorship of Papua LNG to ExxonMobil, which operates the nearby PNG LNG project.

 The move is intended to maximise operational synergies and improve project efficiency. As part of the restructuring,

TotalEnergies will sell a 9.1 per cent interest in Papua LNG to its partners, while retaining a 20 per cent stake and its LNG offtake share.

The company also announced the finalisation of an amended Gas Agreement with the Papua New Guinea government.

The agreement, originally signed in 2019, has been updated to reflect the project's lower capital costs and optimised design, while aiming to maintain strong project economics across different market conditions and protect the state's long-term fiscal interests.

Another milestone is the creation of a joint venture between TotalEnergies and PNG state-related entities represented by Kumul Petroleum Holdings to market 2.4 million tonnes per annum (Mtpa) of Papua LNG's planned 5.6 Mtpa production.

The arrangement is expected to support project financing.

TotalEnergies will also gain access to 1.5 Mtpa of LNG for its global portfolio under a newly signed Heads of Agreement with the marketing joint venture partners.

Following the completion of TotalEnergies' farm-down and Papua New Guinea's exercise of its back-in right, ExxonMobil will hold 34.1 per cent and operate Papua LNG.

TotalEnergies will retain 20 per cent, while Santos will hold 21 per cent, Kumul Petroleum Holdings Limited and MRDC 22.5 per cent, and ENEOS Xplora 2.4 per cent.

The milestones represent significant progress toward a final investment decision on the Papua LNG development.

“These agreements mark decisive step towards the Final Investment Decision of Papua LNG. The transfer of operatorship enhances the project's value creation and competitiveness by leveraging the synergies with PNG LNG during construction and operations phases. Papua LNG will enable the Company to secure significant LNG volumes, strategically located to support energy supply diversification across fast-growing Asian markets,” said Patrick Pouyanné, Chairman and CEO of TotalEnergies. “I want to thank the Government of Papua New Guinea, led by Prime Minister James Marape, for its continuous support, instrumental in achieving these major milestones.” -OGN/TradeArabia News Service