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Commodities

Papua New Guinea, France's Total sign fiscal agreement for Papua LNG project

FILE PHOTO: The logo of French oil and gas company Total is seen at La Defense business district in Courbevoie near Paris, France, February 8, 2021. REUTERS/Sarah Meyssonnier

MELBOURNE (Reuters) - The Papua New Guinea government and France’s Total SA on Tuesday signed a long-awaited fiscal stability agreement for the Papua LNG project, PNG Prime Minister James Marape said.

After nearly two years of uncertainty over the fate of the 5.4 million tonne a year liquefied natural gas (LNG) project, Marape said the agreement would stick to terms agreed in April 2019 for the project.

“It demonstrates Papua New Guinea’s commitment to the Papua LNG Project and gives comfort and encouragement to the developers to progress the project,” Marape said in a statement.

Total and its partners ExxonMobil Corp and Oil Search Ltd had planned to develop Papua LNG in tandem with an expansion of Exxon’s PNG LNG in a $13 billion project adding three new production units at the PNG LNG plant, to help save billions of dollars.

The plan was to double the country’s LNG exports to 16 million tonnes a year.

However, Exxon has not agreed to terms sought by the government for the P’nyang gas development that was going to help feed the expansion, so Total’s Papua LNG project will go ahead with two new production units to be built at the PNG LNG site, fed by the Elk Antelope gas fields.

Papua LNG would still benefit from savings by building its units at the PNG LNG site, which will also help limit its environmental impact.

“These are great outcomes for all stakeholders of the project but more so the National Government,” Marape said.

Reporting by Sonali Paul in Melbourne and Tom Westbrook in Singapore; Editing by Jacqueline Wong and Ed Osmond

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