‘World first’: $10bn LNG Papua New Guinea project backed by TotalEnergies a step closer
A major gas project on Australia’s doorstep could soon become a reality with TotalEnergies inking a landmark deal ahead of a final investment decision this year.
A $US10bn ($15bn) LNG development in Papua New Guinea is a step closer with TotalEnergies inking a landmark deal to progress engineering and design works for the project touted as boosting energy security in Asia.
In a world first, the Papua LNG project – which will extract gas from the country’s remote Gulf Province and send it along a 340km pipeline to Port Moresby for export – will also reinject C02 back into the natural gas wells to “reduce the carbon intensity of the project”.
TotalEnergies on Monday night inked a deal with the Papua New Guinea government to continue major front-end engineering and design work for the Papua LNG project.
Papua LNG production would equate to about one billion barrels of oil, with the gas to supply four electric liquefaction trains with a combined capacity of 5.6m tonnes per annum.
The four electrical LNG trains will be built within ExxonMobil’s existing liquefaction plant near Port Moresby.
TotalEnergies holds 40.1 per cent interest in Papua LNG along with joint venture partners’ ExxonMobil (37.1 per cent) and Santos (22.8 per cent).
It also signed a heads of agreement with JX Nippon to sell a 2 per cent interest in Papua LNG.
The government of Papua New Guinea may exercise a back-in right of up to 22.5 per cent interest.
TotalEnergies is in early discussions with customers for long-term gas supply contracts ahead of a final investment decision by the end of 2023 with first gas expected in 2027.
TotalEnergies Asia Pacific senior vice president for exploration, production and renewables Julien Pouget said the integrated engineering and design agreement was a “significant step” in the development of the Papua LNG project.
“This project, strongly supported by the Papua New Guinea state, will contribute to the security of LNG supply, especially for customers in Asia, where LNG can substitute coal for power generation and participate in a substantial reduction of CO2 emissions in the region,” he said.
However, some within the Papua New Guinea government warn more must be done to ensure benefits to the country and remote villages are maximised.
They have called for caveats ensuring jobs and supply contracts are first offered to Papua New Guineans where the capacity is available.
TotalEnergies also faces challenges consulting residents of some dozen affected villages, where land is customary and not defined by marked boundaries.
Gulf Province Governor Chris Haiveta, who represents the region most affected by the project, said it was critical landowners affected by the expansive project were properly identified and compensated.
“Our customary land is not for sale to anyone, the price of developers and of people coming there is to respect us, respect our culture and to give back within the law,” he said.
Still, PNG Prime Minister James Marape said the progression of the front-end engineering and design work was a “key milestone” in the project.
“This is a testament to what Papua New Guinea can deliver, world class projects,” he said.
The government said it remained in discussions with TotalEnergies about its state-owned energy companies being able to use the infrastructure to improve its domestic energy security.
It also called on the company to fast-track a $500m capital expenditure planned for this year to boost the national economy.
The nation’s petroleum minister, Kerenga Kua, said the Papua LNG Project would “stimulate business confidence and provide a significant impetus for our economy”.
“We have an improved deal for our people and improved contribution of our national contractors and work force,” he said.
Santos managing director and chief executive officer Kevin Gallagher said the concept would deliver a lower capital expenditure.
“The concept selected for Papua LNG maximises value through midstream integration with PNG LNG to deliver increased capital efficiency and lower operating costs, consistent with our disciplined operating model,” he said.
The reporter travelled as a guest of TotalEnergies.