The TotalEnergies-led Papua LNG gas project in Papua New Guinea has officially entered its FEED [front end engineering and design] stage – the last major stage before the $US10 billion project is given a green light. We look at what happens next.

Prime Minister James Marape and Minister for Petroleum Kerenga Kua with representatives from TotalEnergies, Santos and ExxonMobil at APEC House on 6 March 2023 during the announcement of Papua LNG’s FEED stage. Credit: PNG Office of the Prime Minister

A long-awaited milestone towards Papua New Guinea’s next phase of economic growth was reached yesterday with the announcement by joint venture partners, TotalEnergies (40.1 per cent), Santos (22.8 per cent) and ExxonMobil (37.1 per cent) that the fully-integrated front-end engineering and design (FEED) work on the US$10 billion (K35.2 billion) Papua LNG project has commenced.

The announcement was made at a function at APEC Haus in Port Moresby.

Assuming a final investment decision (FID) is made late in 2023 or early 2024, as now suggested, Papua LNG will become PNG’s second major gas project.

FID would mark the beginning of a four-year construction phase, with first production expected by the end of 2027 or early 2028.

Watershed decision

Prime Minister James Marape was quick to acknowledge the significance of the watershed announcement, which would effectively see two LNG projects, Papua LNG and the existing ExxonMobil-led PNG LNG project, running side-by-side at ExxonMobil’s LNG Plant outside Port Moresby.

‘Our government gives its full commitment to expedite the process for Papua LNG. Part of this commitment involves our promptness in completing social mapping, conducting landowner studies, and expanding opportunities for local businesses to grow,’ he said at the announcement.

‘Members are also being contacted by potential EPC [engineering, procurement and construction] contractors for the project about available manpower, equipment and services.’

‘Our records have shown GDP increasing from K31.5 billion in 2008 to K47.7 billion in 2013 from the PNG LNG project. We expect a similar growth from Papua LNG from next year – 2024 – onwards.’

State-owned Kumul Petroleum Holdings is expected to take up the State’s 22.5 per cent entitlement in the project, with the interests of the other venture partners reducing proportionally.

What happens next

Julien Pouget, Senior Vice-President Asia Pacific for Exploration and Production and Renewables at TotalEnergies, notes that entering FEED stage is a significant step in the development of a project planned to have liquefaction capacity of up to six million tonnes of LNG annually.

The FEED stage will be used to finalise the design and specifications of the project, ensure it meets the requirements for the issuing of a Petroleum Development Licence (including a national content plan), finalise marketing for the project’s gas and lock in financing for the project.

The project will be integrated where practical with the infrastructure of the existing PNG LNG project, most notably at ExxonMobil’s existing LNG Plant at Caution Bay outside Port Moresby.

The concept selected for Papua LNG, explains Santos Managing Director and CEO Kevin Gallagher, ‘maximises value through midstream integration with PNG LNG to deliver increased capital efficiency and lower operating costs.’

Meanwhile, an upstream Central Processing Facility, earmarked for construction in Gulf Province – to process both condensate and gas from the adjacent Elk and Antelope gas fields covered by Petroleum Retention Lease (PRL) 15 – is expected to commence as soon as 2024.  

Gas from Elk and Antelope is then expected to be transported via a 320-kilometre onshore and offshore pipeline to Caution Bay.

Contracts for early works

The new Papua LNG project logo, unveiled yesterday. Credit: POMCCI

Rio Fiocco, President of the Port Moresby Chamber of Commerce and Industry (POMCCI), tells Business Advantage PNG that POMCCI members are excited to see the Papua LNG project move to the FEED stage, especially given the commitment by project developers to utilise local suppliers. 

He believes the decision by project lead TotalEnergies to proceed with early works ahead of receiving a petroleum development licence for the project indicates its level of commitment to, and confidence in, the project. 

‘TotalEnergies has already issued contracts for early works, especially for work at the Herd Base in Gulf Province. This includes the provision of a large quantity of aggregate, which is being shipped by barge from Port Moresby, to build the roads and plant site,’ says Fiocco. 

‘Our members are also being contacted by potential EPC [engineering, procurement and construction] contractors for the project about available manpower, equipment and services, while local landowner companies are also being approached about catering services, manpower and so on.’ 

He says major local vehicle and heavy equipment suppliers are also being approached. 

Electric trains

The announcement also confirmed that four revolutionary electric LNG trains – with a combined capacity of four million tonnes annually – will be deployed to ensure lower emissions and better efficiency. 

Papua LNG has also secured access to up to two million tonnes of existing liquefaction capacity from PNG LNG, provided by two of its existing conventional trains.  

To help minimise the project’s carbon footprint, TotalEnergies also plans to bury an estimated 1 million tonnes of carbon dioxide annually and has pledged a commitment to a net gain in biodiversity through major tree planting.