TotalEnergies nears Papua LNG investment decision after cost cuts and Exxon deal

• Cost reductions of close to $4 billion achieved through contract rebidding and design optimization, bringing total capital spending down to approximately $14 billion
• TotalEnergies will sell 9.1% interest to partners but retain 20% stake, while ExxonMobil takes over operations of the project adjacent to its existing PNG LNG facility
• Project secured amended gas agreement with Papua New Guinea government and LNG marketing joint venture to sell 2.4 million metric tons per year of the facility's 5.6 Mtpa total output

TotalEnergies Advances Papua LNG Project with Major Cost Reductions and Exxon Partnership

Key Developments:

TotalEnergies announced Monday it has cleared significant hurdles for its Papua LNG project in Papua New Guinea, moving closer to a final investment decision (FID) targeted for November, according to CEO Patrick Pouyanné.

Financial Details:

The French energy major achieved approximately $4 billion in cost savings since 2024 through contract rebidding and design optimization, reducing total capital expenditure to around $14 billion. The company has completed the tendering process for engineering, procurement, and construction work for the liquefied natural gas facilities, with contracts awaiting joint-venture partner approval.

Operational Changes:

TotalEnergies transferred project operations to ExxonMobil, which already operates the adjacent PNG LNG plant. As part of the restructuring, TotalEnergies will sell a 9.1% interest to partners while maintaining a 20% stake, preserving its LNG offtake rights.

Commercial Agreements:

The project partners finalized an amended gas agreement with Papua New Guinea's government and established an LNG marketing joint venture with state-owned Kumul Petroleum. Under the arrangement:

• Total project capacity: 5.6 million metric tons per year (Mtpa)
• Kumul Petroleum allocation: 2.4 Mtpa
• TotalEnergies offtake: 1.5 Mtpa for its portfolio

Market Implications:

The substantial cost reductions and operational handoff to experienced operator ExxonMobil improve project economics and execution risk profile. The November FID timeline suggests commercial production could begin within 4-5 years, adding meaningful LNG supply to global markets amid ongoing energy transition and Asian demand growth.