Papua LNG inches closer to reality

After years of delays, the US$10 billion-plus Papua LNG project, the country’s largest resources project in over a decade, is on track for a final investment decision at the end of 2023.

By Mark Story

This year, the TotalEnergies-led Papua LNG project enters its FEED [front end engineering and design] stage.

The French super-major is the project’s largest stakeholder, with 31.1 per cent of the project, and is working in conjunction with partners ExxonMobil (28.7 per cent), Santos (17.7 per cent) and Kumul Petroleum Holdings Limited (20.5 per cent).

TotalEnergies EP Asia’s Julien Pouget told delegates at the PNG Mining and Petroleum Investment Conference in December 2022 that the project was ‘progressing well’ and was still on schedule for a final investment decision (FID) at the end of 2023.

Work plan

FID will trigger a four-year construction phase. An upstream central processing facility will be built in Gulf Province, to process both condensate and gas from the adjacent Elk and Antelope gas fields covered by Petroleum Retention Licence (PRL) 15. Work on this is planned to commence in the second quarter of 2024 and be completed before the end of 2027.

Once processed, the condensate and gas will be sent down a set of parallel pipelines, running 64 km overland to Orokolo Bay in Gulf Province, and then for 260 km across the Gulf of Papua to ExxonMobil’s LNG plant at Caution Bay near Port Moresby. Pipeline construction is scheduled for commencement in early 2024 and completion in Q1 of 2027.

Finally, the LNG plant, currently used to compress gas for export for the ExxonMobil-led PNG LNG project, will need to be expanded to accommodate the new gas, with an additional two trains to be constructed, as well as condensate storage and a new flare system.

Windfall

While the project will more directly impact Gulf and Central provinces, it is expected to produce 5.6 million tonnes of LNG annually over 15 years.

‘From a regulatory point of view, we have done all that was needed. We have the gas agreement which secures the fiscal and regulatory terms. They are stabilised in a fiscal stability agreement with all the amendments that were required. So we are ready to go,’ TotalEnergies PNG Ltd Managing Director Jean-Marc Noiray told MPs at a briefing in late 2022.

‘The direct value going to the State we reckon will be in the order and value of US$25 billion (K86 billion) over the life of the project.’

Expressions of interest

In anticipation of a final investment decision, potential suppliers to the project have already been invited to pre-register for work under several levels of cascading engineering, procurement and construction contracts.

Project partners have flagged the expected commencement of early works this year ‘upstream’ at the Elk and Antelope gas fields, allowing for local business participation wherever possible.

In addition to required roading, a new quay, logistics base and airstrip at the project’s Herd Base on the Purari River, early works are also expected to include the construction of a quarry.

Meantime, the Papua LNG project is seeking expressions of interest from those with experience in civil works, security, training, transport and logistics, accommodation, catering, ICT services, waste management, medical services, engineering, recruitment, plant equipment supply, construction supplies, and supply of food and drinking water. 