Industry update: Positive signs for investment decision

While progress on PNG’s next major resources projects has gone more slowly than many in the business community were hoping, there are signs that good news is around the corner.

The TotalEnergies-led Papua LNG project – PNG’s second major gas project – is now officially targeting a final investment decision (FID) early in 2026, according to the CEO of Santos, one of the joint venture (JV) partners in the project.

“All looks set to start in 2026 as far as FID is concerned”

“Our confidence in the Papua [LNG] project is increasing, and we’re looking forward to getting FID ready around the end of this year and then taking FID, hopefully, early in the new year,” Santos CEO Kevin Gallagher said in a late-August earnings call.

This aligned with comments made in June by PNG Prime Minister James Marape, who said he had spoken with TotalEnergies’ global CEO Patrick Pouyanné, and that “all looks set to start in 2026 as far as FID is concerned.”

Papua LNG had been expected to reach FID in early 2024, but the decision was postponed after a first round of bids from engineering, procurement and construction contractors came in with a US$18 billion price tag.

Marape told a Port Moresby business forum that Pouyanné “gave me assurance that the project is still running at cost.”

“They’ve curtailed it down to a project of between US$14 billion and US$15 billion. At US$14 billion, they will settle,” the Prime Minister said.

While Papua LNG would be the next big transformational project for PNG, the smaller Pasca A gas project being pursued by Twinza is significant for a different reason.

Now in its front-end engineering and design stage, the joint venture with PNG’s Mineral Resources Development Company looks set to be the first of several promising hydrocarbons projects in PNG’s territorial waters.

Wafi-Golpu talks ongoing

Negotiations on the US$5.4 billion Wafi-Golpu copper-gold project have been ongoing between Newmont Corporation and Harmony Gold Mining Company, 50/50 partners in the JV that owns the project, and PNG’s State Negotiating Team.

Under PNG law, the state may acquire up to a 30 per cent participating interest in Wafi-Golpu, with 20 per cent expected to be held by state nominee Kumul Minerals Holdings (KMHL) and 10 per cent by the Morobe provincial government and local landowners.

Newmont CEO Tom Palmer said in a July earnings call that the talks were focused on converting the existing memorandum of understanding into a mine development contract, which would then pave the way for a special mining lease.

“These negotiations are important in getting some clear stability around any investment decisions that may come down the track,” Palmer said.
Sarimu Kanu, KMHL’s Managing Director, tells Business Advantage PNG that an FID on Wafi-Golpu “will probably come in the second half of 2027 to mid-2028.”

M&A activity on the rise

While PNG’s business community waits patiently for the green light on Papua LNG and Wafi-Golpu, a recent increase in mergers and acquisitions (M&A) activity shows there is high interest in PNG’s resources sector.

In July, PNG’s Independent Consumer and Competition Commission approved state-owned Ok Tedi Mining Limited’s (OTML) acquisition of Kingston Resources’ Misima gold project in Milne Bay Province.

OTML’s majority shareholder, KMHL, has also been open about discussions to buy into other active mining operations, and in December 2024 signed a memorandum of understanding to purchase a 20 per cent share of St Barbara’s Simberi gold mine.

At the time of writing, the biggest potential deal – a US$18.7 billion bid for Santos by the XRG Consortium (a group comprising the Abu Dhabi National Oil Company, Abu Dhabi Development Holding Company and private equity investment firm Carlyle) – had just been withdrawn by the bidder.

While the due diligence process appears to have proceeded as expected, ultimately the two parties couldn’t come to acceptable terms.

Santos’ PNG assets, which include stakes in both the PNG LNG and Papua LNG projects, were recently described by its Chairman Keith Spence as “the jewel in the crown of the Santos portfolio.”

While the XRG bid was withdrawn, the interest could be viewed against a recent global trend towards consolidation in the oil and gas sector (according to recent EY study, M&A activity in the sector increased by 331 per cent last year in the US alone).

Downstream plans

Meanwhile, the government continues to push its downstream ambitions, with Richard Maru, Minister for International Trade and Investment, telling the 2025 Business Advantage PNG Investment Conference that “we need to downstream process all of our materials.”

The Marape-Rosso government has shown its readiness to provide incentives for downstream projects, recently approving special economic zone status for the Central Cement & Lime Project.

Additionally, KMHL is at the centre of studies into a local gold refinery and nickel refinery and smelter.

This article was first published in Mining and Energy 2025/26, released in October. Read the full edition here.

If you are attending PNG Investment Week in Sydney (8 to 11 December), you can pick up a free copy from the Business Advantage PNG stand at the event expo (Stand E01).