There are signs of a renewed effort to push ahead on the Total-led Papua LNG project after successful meetings in Paris between the company’s CEO and a senior Papua New Guinea government delegation.

Prime Minister Marape, Total SA executives and ministers during the signing of Papua LNG in February. Credit:

It has been reported that the meeting in Total’s Head Offices in Paris reflected a ‘new sense of urgency’ about the [Papua LNG] project and an intention to ‘remobilise’ the $16 billion venture.

The Chief Executive of Total SE, Patrick Pouyanné, tweeted that he had a ‘very fruitful’ meeting with PNG’s Deputy Prime Minister, Sam Basil. ‘Together with the Government of PNG, we are pleased to confirm the remobilisation of the teams and the planning of the Papua LNG project.’

Pouyanne said the Papua LNG project ranks ‘very high in Total’s portfolio’, citing its proximity to the growing Asian LNG markets. He said Total will ‘dedicate all necessary resources’ to the venture, which focuses on the large Elk and Antelope gas fields in Gulf Province.

🇵🇬 I had a very fruitful meeting with Papua New Guinea Deputy Prime Minister Samuel Basil. Together with the Government of #PNG, we are pleased to confirm the remobilization of the teams and the planning of the #Papua #LNG project : FEED 2022, FID 2023
👉 https://t.co/9hvBVVkvqZ pic.twitter.com/XWt4uYCwVI

— Patrick Pouyanné (@PPouyanne) May 5, 2021

Sam Basil said the Paris meeting was ‘vital’ for the PNG government to emphasise to Pouyanné and French authorities the importance to the nation of the project ‘and to pledge the full support of our government to this project’.

In March, Basil stated that ‘all parties are clear on what is required to move ahead, and we are jointly committed with the clear outlook to make sure all the key project deliverables are achieved leading to First Gas’. He claimed the project is ‘moving towards a Final Investment Decision with no further delays.’

‘Across 2029 and 2030, the market could tighten again and face supply deficits amid an expected surge in global LNG demand.’

The new objective ‘is to launch the FEED early 2022 and to prepare for final investment decision in 2023.’

This development follows the reconfirmation of the Papua LNG Gas Agreement in 2019, the signature of the Fiscal Stability Agreement and the award of the License extension in February.

Mozambique

Location of the Papua LNG project, PNG LNG, Elk and Antelope onshore fields. Credit: Total

International developments may have affected Total’s investment priorities, increasing the urgency to develop Papua LNG. The company was forced to suspend its $US20 billion (K70.7 billion) LNG project in Mozambique due to violence and security risks, which included a March attack by Islamic State-linked militants.

The suspension has been described as a ‘blow’ to Total, which bought an operating stake in the project for US$3.9 billion (K13.8 billion) in 2019 with a view to exporting LNG by the end of 2024.

According to research company Rystad Energy the indefinite delay at the African project means there are likely to be shortages and higher prices in the global LNG market. Rystad said it could mean nine million tonnes per annum of supply will be removed between 2026 and 2030, ‘disrupting global balances’.

Papua LNG is now Total’s only new LNG project in Asia-Pacific after the suspension of the Mozambique project.

Third train

David Lennox, Resource Analyst for funds management company Fat Prophets tells Business Advantage PNG that he expects Papua LNG to go ahead, although venture partner Oil Search may dilute its ownership in a proposed third train (the Papua LNG project will initially have two trains; a proposal for a third train to expand PNG LNG is to be considered separately).

‘There is no doubt about [Papua LNG’s] success, so we can’t see a third train not following on in the footsteps of its two bigger brothers.

‘There is still a fair way to go for the transition to renewable energy. And an LNG train now won’t be quite as expensive because they have already got a lot of the infrastructure. All the fields are there and all the gas is there and they have good long-term customers and contracts.’