TotalEnergies has said that Papua LNG project has progressed on the marketing, financing and upstream-downstream engineering works.
TotalEnergies said that Papua LNG project has progressed on the marketing, financing and upstream-downstream engineering works as the US$12 billion project is on course for final investment decision (FID) and commence construction this year with first LNG expected in 2028.
Marketing
The French major is in talks with potential Asian LNG buyers to secure off-takers for its 2 MMT/Y equity share in the project’s LNG production.
Financing
Notwithstanding a group of 50 environmental and climate change campaigners had urged global lenders in the US, Europe, Asia and Australia to refuse financing of Papua LNG project, TotalEnergies is actively lining up funding for the project and Credit Agricole is reportedly hired as advisor for negotiations with interested lenders.
PNG officials have revealed that Chinese banks are interested to replace western banks for financing the LNG project. PNG’s main state-run energy company Kumul Petroleum has confirmed that it is in advanced talks with three Chinese banks to help finance its 22.5% share of the Papua LNG project in the FID date as they had “fewer concerns around fossil fuel development”.
Meanwhile, US and Australia are worried about China’s increasing influence in the Pacific region and urged PNG to turn down China's offers for security and economic aid. However, PNG PM James Marape has said that his government is adopting a balancing policy in its ties with Australia, USA and China.
Security & Social
The Pacific island nation has struggled with a surge in violent crime over the past year, which are principally rooted in the poverty of the people. After last month deadly riots in the PNG capital Port Moresby, the government is seeking to improve the nation’s economy by boosting foreign investment in the country’s mineral and energy sectors.
Marape expects that Papua LNG to improve his nation’s economy as he has remarked the “historical economic growth” generated by the country’s first LNG project (PNG LNG) which increased its GDP by more than 50% from 2008 to 2013. “We anticipate a similar trajectory for Papua LNG starting from 2024 onwards."
Engineering
Papua LNG joint venture launched an integrated Front End Engineering Design (FEED) for the project in March and JGC in partnership with Hyundai Engineering & Construction awarded the FEED and Engineering, Procurement and Construction (EPC) estimation contract for the project’s LNG facilities (downstream).
Papua LNG project’s first phase of the FEED studies for the upstream facilities was awarded in July 2022 to a consortium of Technip Energies (leader) and Clough.
The 6 MMT/Y Papua LNG project’s shareholders are TotalEnergies (operator) 40.1%, ExxonMobil 37.1%, Santos Ltd 22.8%. PNG government to exercise a back-in right for up to a 22.5% interest at the FID date.
Updates:
On 28 Feb. PNG's petroleum minister Jimmy Maladina denied reports saying that the Papua LNG project was struggling to secure funding as his government has received assurances from the project’s operator TotalEnergies that “things are on track” as it was "very comfortable" about securing funding for the roughly US$12 billion project, despite European banks' increased reluctance to fund new fossil fuel projects.
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