TotalEnergies has a 37.55 percent operating stake in the Papua LNG project, ExxonMobil has 37.04 percent, Santos owns a 22.83 percent interest, and JX Nippon holds 2.58 percent.
In April 2024, the partners delayed the project’s FID to 2025, saying that they needed to keep working with contractors to obtain “commercially viable” EPC contracts.
Pouyanne said earlier this year that FID is expected in 2026.
Four workflows
He discussed the next steps towards FID during TotalEnergies’ first-quarter earnings call on Wednesday.
Pouyanne said that the partners are working, in parallel, on “at least four workflows.”
“The CapEx side, I would say, and the EPC are progressing very well. We have made some recommendations to our partners. We are waiting for the approval from one of them, so I hope we will get it soon so that we can move forward,” he said.
“In parallel to that, we have the financing of the project.. Both are linked. By the way, because as you know, selection of the nationality of some contractors have an impact of the involvement of export credit agencies,” Pouyanne said.
“We need to have decided on the contractors so that we can definitely confirm to the different credit export agencies,” Pouyanne said.
“I think there is some appetite clearly from Asian credit export agencies, but also we discussed with the US ones about it,” he said.
Japan’s JGC and South Korea’s Hyundai Engineering & Construction recently said that they have been selected as the engineering, procurement, and construction (EPC) contractor candidate for the TotalEnergies-led Papua LNG project.
The final EPC contract award is expected after the project’s FID in 2026, according to JGC.
Under this project, JGC and Hyundai E&C will form a joint venture to construct the LNG production plant in Port Moresby, using natural gas feedstock from the Elk-Antelope gas fields in Papua New Guinea.
According to JGC, EPC services are for an LNG plant with an annual capacity of approximately 4 mtpa, ot three 1.33 mtpa trains.
The facility will be built adjacent to the existing PNG LNG processing facilities, operated by ExxonMobil and located 20 kilometers northwest of Port Moresby.
$14.5 billlion
Pouyanne said the third workflow for FID on Papua LNG is a discussion with the government.
“We have progressed.. I could almost say finalized, but I didn’t see the ink on the paper. Between the government and us, there is a good understanding of the agreement. Of course, it will have to be again approved by our partners,” he said.
“We are now in the process of closing the loop, I would say, between the partners, governments on these finances and terms,” Pouyanne said.
“The CapEx will be around $14.5 billion.. It’s much better than the $18 billion,” he said.
He said the “idea is to protect the project when the price of oil is low and to give back some when the price is high, above $90, I would say.”
TotalEnergies to keep part of Papua LNG volumes for its portfolio
Moreover, Pouyanne said the fourth workflow for FID on Papua LNG is marketing.
“On marketing, there is quite a lot of progress. Again, on our side, the more we look to Papua LNG, the more we have an appetite for the LNG located in that region and diversifying our portfolio,” he said.
“It’s possible that we could market, because we market not only our LNG, but the one of Kumul as well. We could market maybe 1 million tons on the long term and keep the other 1.5-2 for our own portfolio. We are looking to different options,” he said.
“All that is progressing. I would say, the target is to sanction the project, for sure before the end of the validity of the offers, which is I think around November,” he said.
“Because in this market, we don’t want to reopen and to negotiate to extend offers. You know, we could face some inflation there,” Pouyanne said.
“But, I think, and we are aligned, I think, with the partners on moving to the FID, second half of the year,” he said.
“There is a last point to clarify.. We need to be sure of the way that Kumul financing, you know, there is a Kumul back-in, and we need to know exactly what is the back-in on which it will be exercised,” he added.
