TotalEnergies Cuts Papua LNG Costs to $14B, Yields Operatorship

TotalEnergies advanced the Papua LNG project toward a final investment decision by reducing capital expenditures to approximately $14 billion and transferring project operatorship to ExxonMobil, positioning the venture to capture Asian energy demand.

"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.

EPC Tendering and Capital Cost Reductions

The cost reductions followed the completion of the engineering, procurement and construction tendering process, according to a corporate announcement. Through project design optimization and expanded contractor bidding, the company shaved approximately $4 billion off projected expenses since 2024, bringing the overall capital expenditure down to around $14 billion.

Ownership Structure and Operatorship Transfer

Under the restructuring, TotalEnergies will hand over operatorship to ExxonMobil, which already operates the neighboring PNG LNG facility. TotalEnergies will sell a 9.1% interest to project partners, retaining a 20% stake in the venture.

Following the completion of the farm-down and the State of Papua New Guinea's exercise of its back-in right, the post-transaction equity distribution will consist of:

• ExxonMobil holding 34.1% as operator
• Santos holding 21.0%
• TotalEnergies holding 20.0%
• Kumul Petroleum Holdings Limited and MRDC holding a combined 22.5%
• ENEOS Xplora holding 2.4%

Marketing Agreements and Global Supply

TotalEnergies and Papua New Guinea state-related entities, represented by Kumul Petroleum Holdings Limited, have established an LNG marketing joint venture. The partnership is designed to commercialize 2.4 million tonnes per annum out of a total projected production capacity of 5.6 Mtpa.

Additionally, the energy firm executed a heads of agreement securing access to 1.5 Mtpa of liquefied natural gas for its global portfolio.

What Is at Stake for Asian Energy Markets

The agreements reshape development plans for major natural gas reserves in the Asia-Pacific region. By combining operational management with the adjacent PNG LNG infrastructure, the consortium aims to streamline construction logistics and supply chains serving growing import markets across Asia.