US$10 billion Papua LNG project to go ‘full steam ahead’ in Papua New Guinea


Papua New Guinea’s Petroleum Minister has announced that the government will honour a gas deal struck with French major Total SA for the US$10 billion Papua LNG project. The project will be the single largest foreign investment in the Pacific country since the advent of the US$19 billion PNG LNG project a decade ago.

The Antelope gas field in Gulf Province, part of the Papua LNG project.

After some nervous moments, the path now seems clear for the Total-led Papua LNG project to move forward into the critical front end engineering and design (FEED) stage.

‘The government has now cleared Total to proceed full steam ahead with the implementation of the Papua Gas Project,’ Petroleum Minister Kerenga Kua said in a statement.

The announcement follows approval by PNG Cabinet on Monday and extensive negotiations between the government and the developer since 15 August.

‘As is typical of any such process, there was an initial impasse but it did not escalate into a “Mexican Standoff”,’ said Kua of the negotiations. ‘Articulation of the State’s concerns, regulatory, fiscal and otherwise, led to an easing of positions, which resulted in Total and its partners becoming more forthcoming.

‘This resulted in Total Exploration & Production PNG Limited (Total E&P Ltd) making concessions (at best) or, in the worse case scenario, indicating a willingness to explore with the Government avenues for meeting the State’s expectations. This came in the form of a letter from Total E&P Ltd, dated 30 August 2019 (the Total Letter), which was hand delivered to me on 31 August 2019.’

‘Substantial’ concessions

While noting that the Total letter was not a ‘legal document or instrument’, Kua said the government had obtained ‘substantial new concessions on potential future benefits not previously available to the country under the signed agreement‘ and would now allow the project to progress ‘in good faith.’

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‘Total is ready to progress immediately in preparing a detailed National Content Plan with the Department of Petroleum and Energy, a requested by the Hon. Minister for Petroleum. We are convinced that the development of this National Content Plan will provide many positive opportunities for the State and the people of PNG,’ he said.

Map of LNG Sources in PNG Credit: Oil Search

He also said Total had agreed to build third party access points to its gas pipeline out of Gulf Province and ‘if requested by a third party, the Participants have agreed to engage in negotiations to enable access by such third party to the pipelines on mutually acceptable terms’.

He also said Total had agreed that ‘after all loans to the Papua LNG Project and Kumul [Kumul Petroleum, the State’s nominee in the project] carry and past costs have been reimbursed, if the State wishes at that time to acquire a participating interest in the pipelines, the Participants will engage to negotiate in good faith such an acquisition by the State and the conditions under which it could be envisaged.

‘In particular, the State shall recognise the “fair value” of the investment in considering such an acquisition including a fair tariff imposition for usage of the pipeline.’

State ownership of some of the LNG tankers used by the project is also now a possibility.

‘Total and Kumul [Petroleum] have formed a commercial joint venture for the purpose of marketing their shares together. Total agrees to evaluate together with Kumul the option of using LNG carriers in which a participating interest is owned by the State for transportation of Kumul’s share of such jointly marketed cargoes through negotiated arm’s length contracts,’ the statement said.

‘These agreements now pave the way for us to see much increased National Content during the construction phase, future pipeline ownership, future shipping ownership. These are substantial gains.’


In June, the new Prime Minister James Marape announced a review of the agreement, which had been signed in April between the previous O’Neill Government and the project developers, Total SA, ExxonMobil and Oil Search.

The agreement covered the development of of PNG’s second LNG project, based on the Elk and Antelope gas fields (contained within the PRL15 petroleum lease) in Papua New Guinea’s Gulf Province.

‘Next step is the Front End Engineering Design (FEED), followed by the Final Investment Decision (FID).’

On August 15, the government sent a negotiating team to Singapore to ‘seek to renegotiate’ the terms of the agreement.

A statement on that date from the Minister for Petroleum, Kerenga Kua, said that the ‘Papua Gas Agreement was disadvantageous to the State and the people in certain respects.’

It said the ‘peoples’ expectations should be guarded through this period.’

The gas agreement was one of the key stages needed for Total and its partners to go ahead with a US$10 billion plan to double liquefied natural gas (LNG) exports from PNG.

Next step is Front End Engineering Design (FEED), followed by the Final Investment Decision (FID). According to the ANZ’s PNG Economic Outlook, 97 per cent of the gas projects that enter into FEED have a positive final investment decision.

Back in April, that Managing Director of Total PNG, Jean-Marc Noiray, told Business Advantage PNG that a Final Investment Decision (FID) wasn’t expected until the fourth quarter of 2020. First production from the new LNG trains should start in 2024.


Papua New Guinea became a member of the exclusive club of LNG exporters in 2014, when the ExxonMobil-led PNG LNG project commenced shipments.

The new project will make use of some of the infrastructure created for the earlier project, notably the PNG LNG Plant at Caution Bay outside Port Moresby. Further trains are expected to built there to process the additional gas.

The project is also expected to stimulate infrastructure development in PNG’s Gulf Province, where the gas is located.

The announcement was welcomed by one of Total’s partners in the Papua LNG project, Oil Search.

‘We are pleased that the PNG Cabinet (National Executive Council), has completed its review of the Papua LNG Gas Agreement and has validated the Agreement as executed on 9 April 2019,’ said Oil Search’s Managing Director Peter Botten.

‘The next step for the proposed integrated three LNG train development is the finalisation of the P’nyang Gas Agreement. Once signed, the PRL 15, PRL 3 and PNG LNG joint ventures can proceed into FEED for this nationally-important development.’

Read our analysis of the financial impact of the Papua LNG project here.


  1. I opt to disagree with Tony & Desmond. The granting of additional concessions ensuing from the Review is an indication of what could have been included in the original agreement but did not.

  2. Those so called reviews where just a leverage for political gain and another way of taking things under the table.
    Papua New Guinean leaders are so cruiel and snakes in the grass.

    Am saying this because when PNC lead government sign the project it seems they really carried out some very good due delegence since the current government and our good Minister cannot pinpoint any errors in the aggreement when doing his empty sound reviews.

    • Desmond says

      Totally agree with you Tony….its all them wanting their cut and using us the people as an excuse as usual….

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