September 08, 2026 [Storage Terminals Magazine]- Papua LNG has reached a series of contractual and commercial milestones that move the project closer to a Final Investment Decision (FID), according to project partner TotalEnergies.

The milestones include completion of the engineering, procurement and construction (EPC) tendering process, changes to project operatorship and ownership, an amended Gas Agreement with the Government of Papua New Guinea, and the establishment of a joint venture to market part of the project’s LNG production.

The EPC tendering process has been completed, with contract award recommendations now awaiting approval from the project’s co-venturers. Since 2024, project optimisation and the rebidding of EPC packages have generated close to US$4 billion in cost savings, bringing estimated capital expenditure down to approximately US$14 billion.

The cost reductions have been achieved through project design optimisation, including an alternative upstream condensate development scheme designed to create synergies with the existing PNG LNG project, as well as the rebidding of EPC packages with an expanded group of Asian EPC contractors.

As part of the project’s development strategy, operatorship will be transferred to ExxonMobil, which already operates the PNG LNG project. TotalEnergies and ExxonMobil are expected to work together on the transition to ensure continuity of project activities and existing commitments to government authorities and other stakeholders.

The operatorship transfer will also be accompanied by a change in TotalEnergies’ participating interest. Following the exercise of Papua New Guinea’s back-in right, TotalEnergies plans to sell a 9.1 percent interest in Papua LNG to its project partners, in proportion to their existing participating interests. TotalEnergies will retain a 20 percent interest while maintaining its share of the project’s LNG offtake.

The Gas Agreement between the Papua LNG partners and the Government of Papua New Guinea has also been amended. The revised agreement takes into account the project’s updated capital cost and optimisation measures, with the changes intended to support project economics across different market conditions while preserving the state’s long-term fiscal interests.

A separate LNG marketing joint venture has been established between TotalEnergies and Papua New Guinea state-related entities represented by Kumul Petroleum Holdings Limited. The venture will jointly market 2.4 million tonnes per annum (Mtpa) of LNG from Papua LNG, which is expected to produce a total of 5.6 Mtpa. The marketing structure is also intended to support project financing.

In addition, TotalEnergies has entered into a Heads of Agreement with the LNG marketing joint venture parties covering LNG offtake. The agreement provides TotalEnergies with access to 1.5 Mtpa of LNG for its global portfolio.

TotalEnergies Chairman and CEO Patrick Pouyanné said the agreements represented a significant step towards the project’s FID. He said the transfer of operatorship to ExxonMobil would allow the project to benefit from synergies with PNG LNG during both construction and operations.

Following completion of the planned farm-down and the exercise of Papua New Guinea’s back-in right, the Papua LNG ownership structure is expected to comprise ExxonMobil with a 34.1 percent interest as operator, TotalEnergies with 20 percent, Santos with 21 percent, ENEOS Xplora with 2.4 percent, and Kumul Petroleum Holdings Limited and MRDC with a combined 22.5 percent.

The project is expected to leverage its location in Papua New Guinea to supply LNG to Asian markets, with the latest contractual and commercial developments representing further progress towards a potential FID.