Australian energy company Santos will increase its stake in the Papua LNG project to 21%, after reaching a binding agreement to acquire an additional 3.3% from TotalEnergies following state reinvestment. The transaction reinforces the company’s exposure to the liquefied natural gas market (LNG) in Asia and coincides with a significant change in the management of the development located in Papua New Guinea.
For its part, TotalEnergies agreed to transfer the operation of Papua LNG to ExxonMobil PNG Antelope Limited and partially reduce its stake among the joint venture partners. For Santos, the acquisition will have an approximate price of US$189 million.
The agreement is still subject to regulatory approvals and Papua LNG reaching a final investment decision (FID). Currently, this decision is expected in the fourth quarter of 2026.
Santos increases its exposure to the Papua LNG Project
With the acquisition, Santos will control a 21% stake after state reinvestment. The company estimates that this increase will raise its proportional LNG production from the project by approximately 19% to about 1.2 million tonnes per annum (Mtpa).
Likewise, the move expands Santos’ position in a development designed to meet Asian LNG demand. The Australian company already maintains energy operations in Australia, Papua New Guinea, Timor-Leste, and the United States, in addition to being a significant supplier of gas and LNG to Asia.
The effective date of the acquisition is set for January 1, 2026, although its closing remains conditional on the fulfillment of the anticipated requirements.
Kevin Gallagher, CEO and Managing Director of Santos, noted that Papua LNG is strategically located to supply Asian markets and highlighted ExxonMobil’s experience in executing projects in Papua New Guinea.
According to Gallagher, the company expects that the joint management of assets related to Papua LNG and PNG LNG will allow for operational synergies in upstream activities and midstream.
ExxonMobil to assume operation of Papua LNG
The change of operator constitutes another central element of the reorganization. ExxonMobil, the largest energy and oil company in the United States, will assume management of Papua LNG through ExxonMobil PNG Antelope Limited.
The US company also has direct experience in the country through the operation of PNG LNG. Santos believes that this presence can facilitate coordination between both developments and strengthen the execution of Papua LNG.
In parallel, TotalEnergies will partially reduce its position after having driven the project for approximately a decade. The changes aim to align the partners’ stakes and responsibilities before reaching FID.
For Santos, the operation is also part of a capital allocation strategy focused on projects linked to existing infrastructure. The company expects Papua LNG to contribute to its next phase of growth once its Barossa gas and Pikka oil projects come online.
Papua LNG advances towards final investment decision
Papua LNG is being developed around the Elk-Antelope gas fields in Papua New Guinea. The extracted gas will be processed and treated before being directed to the liquefaction facilities located in Caution Bay, near Port Moresby.
The technical progress of the project has also seen recent developments. Daewoo E&C was awarded preferred bidder status for the engineering, procurement, construction, and commissioning of the central processing plant and wellhead platforms.
This infrastructure will process the natural gas from Elk-Antelope before its transfer to the facilities where it will be converted into LNG.
For now, the next decisive point will be the FID scheduled for the fourth quarter of 2026. Once reached, Santos expects to provide updated information on the project’s costs, schedule, and economics.
With a projected 21% stake and an estimated proportional production of approximately 1.2 Mtpa, Papua LNG will strengthen Santos’ position in the Asian LNG market while ExxonMobil expands its operational role within Papua New Guinea’s gas industry.
Source: Santos
Photo: Shutterstock
