KEY POINTS
- ExxonMobil will take over Papua LNG operatorship.
- TotalEnergies will cut its stake to 20%.
- Project costs have fallen to about $14 billion.
ExxonMobil is set to take over operatorship of the Papua LNG project in Papua New Guinea from TotalEnergies as part of a broader restructuring aimed at streamlining the development and bringing it closer to a final investment decision (FID).
Under the agreement, TotalEnergies will transfer operatorship to ExxonMobil and sell a 9.1% interest in the project to existing joint-venture partners. Following the transaction and Papua New Guinea’s exercise of its back-in right through state-owned Kumul Petroleum Holdings, TotalEnergies’ stake will fall to 20%.
The operatorship change is expected to create stronger operational links between Papua LNG and the nearby PNG LNG project, which is already operated by ExxonMobil.
Papua LNG is designed to produce about 5.6 million tonnes of liquefied natural gas (LNG) annually from a proposed facility at Caution Bay, near Port Moresby.
The project will be developed alongside ExxonMobil’s existing 8-million-tonne-per-year PNG LNG operation. TotalEnergies said placing both projects under ExxonMobil’s operatorship could unlock significant synergies in construction, infrastructure development and future operations.
TotalEnergies chairman and chief executive Patrick Pouyanné said the restructuring represents an important step towards the project’s FID and should help maximise efficiencies across the two LNG developments.
Ownership structure changes
Once the sell-down and the Papua New Guinea government’s back-in exercise are completed, ownership of Papua LNG is expected to be divided among five parties.
ExxonMobil will hold the largest share at 34.1%, followed by Santos at 21%. TotalEnergies will retain 20%, while ENEOS Xplora will hold 2.4%.
The remaining 22.5% will be held by Papua New Guinea’s state-owned Kumul Petroleum Holdings and Mineral Resources Development Company (MRDC).
Santos has separately agreed to pay about $189 million for an additional 3.3% interest in the project.
Despite reducing its equity position and giving up operatorship, TotalEnergies will continue to receive its share of Papua LNG production through its LNG offtake entitlement.
The French energy company has also signed a heads of agreement that will give it access to 1.5 million tonnes of LNG annually for its global portfolio.
This arrangement allows TotalEnergies to maintain exposure to the project’s future LNG production while reducing its direct ownership and operational responsibilities.
