Australia's Santos said it had acquired an additional 3.3% stake in the project for $189 million as part of the divestment, lifting its total interest to 21% and boosting its equity liquefied natural gas production by about 19% to around 1.2 million metric tons per year (Mtpa).
The deal is subject to Papua LNG reaching a final investment decision, expected in the fourth quarter of 2026, Santos said. TotalEnergies said contractual and commercial hurdles had now been cleared for that decision.
Project costs fall as development advances
Papua LNG is part of TotalEnergies' portfolio of projects to grow lower-cost LNG supplies, producing 5.6 Mtpa from the Elk and Antelope fields in Papua New Guinea's Gulf Province, mainly for Asian buyers.
Exxon, which already runs the neighbouring PNG LNG plant, will take over as the operator of the project.
"Bringing Papua LNG and PNG LNG under ExxonMobil operatorship is expected to strengthen alignment across the projects, improve execution efficiency, and support the development of Papua New Guinea's world-class LNG resources," an ExxonMobil spokesperson said.
TotalEnergies has completed the tendering process for engineering, procurement and construction work for the project, it said, with contracts now pending its partners' approval.
Close to $4 billion has been achieved in cost savings since 2024 through rebidding those contracts and optimising the project design, bringing capital spending down to around $14 billion, it added.
Marketing agreements and offtake remain in place
The companies have also finalised an amended gas agreement with Papua New Guinea's government and set up an LNG marketing joint venture with Kumul Petroleum to sell 2.4 Mtpa of the project's 5.6 Mtpa output.
TotalEnergies' offtake share of the project remains unchanged, giving it access to 1.5 Mtpa for its portfolio.
TotalEnergies to sell stake and hand operatorship to Exxon
TotalEnergies TTEF.PA will sell a 9.1% stake in the Papua LNG joint venture to its partners and hand the project's operatorship to ExxonMobil XOM.N, the French energy major said on Monday.
The company, which co-owns the project with Exxon, Santos STO.AX, Kumul Petroleum/MRDC and ENEOS Xplora, said it would sell shares to its partners in proportion to their existing interests, while retaining a 20% stake. It did not provide a sale price.
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