Landmark agreement: Papua New Guinea increases its stake in future LNG exploration projects with Total


Kumul Petroleum has announced that the PNG government has negotiated an additional seven per cent equity with future joint venture projects with Total after ‘remobilisation talks’ regarding the Papua LNG project in Paris last week.

In November 2020, Prime Minister Marape [centre] celebrated the passing of the six bills that helped re-open the dialogue with Total for the Papua LNG project. Credit: Office of the Prime Minister and NEC via Facebook

The move is a ‘profound achievement that gives effect to the Marape–Basil Government’s “Take Back PNG” agenda,’ said Wapu Sonk, Managing Director of PNG’s state-owned petroleum company, Kumul Petroleum Holdings Ltd (KPHL).

He said the additional seven per cent free-carried equity in future joint exploration projects with Total SE will be on top of the State’s 22.5 per cent back-in rights.

‘This will effectively bring [KPHL’s] aggregate equity to near 30 per cent [in future projects].’

The equity increase for future projects was negotiated and secured on 3 May during discussions in Paris held between a PNG government delegation, led by Deputy Prime Minister Sam Basil, and a Total SE Delegation led by its Chief Executive, Patrick Pouyanné.

‘In an exceptional goodwill gesture, Mr Pouyanné has acknowledged the Marape–Basil government’s efforts to secure greater local participation for their country,’ said Sonk. ‘As part of Total’s strategic endeavour to continue cementing the relations with the national stakeholders, it was agreed that Total SE and PNG authorities would cooperate to create significant in-country value and to implement the Papua LNG project in an exemplary manner.’

The seven per cent free carry will allow Kumul Petroleum to access technical data and jointly participate as a joint venture partner without having to fund its additional equity up front.

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Pushing the boundaries

Kumul Petroleum’s Wapu Sonk. Credit: WBG

The Papua LNG project, in which Kumul Petroleum is expected to take a 22.5% stake, will require US$13 billion (K48 billion) in capital expenditure by Total and its joint venture partners, ExxonMobil and Oil Search.

‘[Papua LNG] stands to turbo-charge and boost the local economy during this COVID-19 pandemic-induced economic recession and much more into the future,’ said Sonk. He said future joint exploration projects will be affected by the project, including the deep and ultra-deep offshore exploration blocks covered by the PPL 576 and PPL 579 exploration licences in the Gulf of Papua.

He said the Papua LNG agreement has ‘pushed the boundaries’ beyond PNG’s current Oil & Gas Act resource envelope provisions. Total is expected to speed up remobilisation works, with the aim of committing the balance of Pre-FEED (Pre-Front End Engineering Design) by the end of this year and commencing the FEED early in 2022. A Financial Investment Decision (FID) on the project is expected in 2023.

Marketing and finance

A positive FID will depend on a successful campaign to market the gas to customers in Asia.

‘Kumul Petroleum anticipates the resumption of our joint marketing efforts for our LNG entitlements with Total to ensure successful conclusion of Sales and Purchasing Agreements (SPAs) in the LNG Market. Kumul Petroleum will aim to conclude these SPAs by the end of third quarter of 2022,’ said Sonk.

Sonk said Total and Kumul will also explore joint equity financing options.

‘The outbreak of the COVID-19 pandemic has led to major needs for financial corporations to preserve their underlying liquidity positions. We recognise the financial stress and challenges induced by the pandemic in major financial markets, and will endeavour to leverage our combined synergies to attract major global financial institutions to finance our equity shares.’

In June 2020, Prime Minister James Marape said PNG’s oil and gas laws have been subordinated to ‘commercial Interest’ at great cost to the people of PNG. He proposed an amendment to PNG’s existing Oil and Gas Act 1998, the Oil and Gas (Amendment) Bill 2020, saying there must be a greater ‘share of revenue’ going to the government.

Editorial note: Following further clarification from Kumul Petroleum, this story has been amended to make clear that the free carry arrangement above refers to future exploration projects only and not to the Papua LNG project as previously indicated.


  1. Jafe James says

    Thank you PNG CEO. That’s the mandate our people from Tari-Pori voted for and PNG previous leaders must take such course.

  2. Mel Bill says

    Please park all income from this project in country to improve forex.

  3. John Pius Wagambie says

    Its all very talking up the additional equity in the Total LNG Project. But what happened to all the money generated from the Hides Project??? We are supposed to be well off financially and our standard if living going above the poverty line. Yet PNG us still a Donor recipient country. Its the Politicians especially Prime Ministers of the past. Who have pilfered all the money.
    Its election time so the polies are at it again

  4. Detlef Malai says

    It’s good the current government looks for the betterment of our future and children.Please look for leader who have heart for people and not money.Thanks to this short current government for making a bold stand to change laws to our own benefit.

  5. James Mangao Lai says

    One day our kids will thank this Government. Patriotic leader creates pathway for better future.

    Congratulation Marape-Basil Government.

  6. Steward Hariec says

    What is the total number of employees that are going employed in that company.

  7. Mende Korugl Max says

    That is a good news for us to hear and proud of being a Papua New Guinean. But, in reality how do we benefit from this,?????????? I hate PM said “for the people of PNG”

  8. Lola Kemu says

    It is a clear sign of committed and dedicated Prime Minister -James Marape taking some concrete decisions on talking PNG back. I believe LNG deal on this note is a right timing that country have experienced losses within first 45 years of Independent. To walk the talk, the highly educated ministers should do more talking on bring their knowledge to international bodies to keep reaping the best out of their mind in development to resource our young nation and stay intelligently and rise above any expectations. PNG is blessed with many natural resources and we need more blessed personal to open up and speak your minds. Yes we are in right direction after many tears of learning.

  9. Eduardo FABILA says

    It’s almost elections … I wonder who or what political parties form the government, will this agreement be upheld,??? instability will harm our economy badly,and PNG people now Must wake up and change our mindset in a positive way, for the prosperity of our beloved country,,May God bless PNG

  10. Maupua. Ovasuru says

    I feel sad, for our country. Looking back to some historical events and facts;
    BCL, Misima mine, pogera mine, ok tedi mine, etc, the LNG Hela and SHP;
    Goes on with other resources.

    This country has been Robbed, by investors and some corrupt leaders. Our past great leaders have done nothing, to protect us PNGuineans.

    The west laws, have stolen what was rightful ours. Our land, which GOD blessed us with.

    Looking around PNG, NIL development in areas where LNG, mining, forest, agriculture, etc…

    Where are all the money for this resources going??????, that should help PNG in education, health, roads, youth development programs etc…

    2022 NGE, is just around. I am Praying for a honest leader, and also will be taking part of a candidate for the Regional seat Gulf Province.

    Thank you and GOD bless PNG, in the name of our Lord Jesus Christ.

    Maupua. Ovasuru.

    Gulf Province.

  11. The important part is the sharing of our benefits.
    There are three parties to benefit.
    The Government, the people and the investor/Investors.
    Which one of those should get 1% more above the others?

    We the indeneguos land resource owners of Gulf Province will want the Government to fulfill its commitment and agreements with the people.We want the Gulf provincal government to tell us everything in clear daylight.

    That’s a very simplified and important taught.

  12. Vailea Ora says

    Its already 45 years since independence and our institutions by now should had being working towards this kind of technology so that we should be seen carrying out our own explorations and producing what the market needs in the world. Otherwise, we will keep chasing the wind for another 20 years.

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