France's Total and its joint venture partners in the Papua liquefied natural gas project in Papua New Guinea are breathing easier after the PNG Cabinet agreed in principle to support the Papua LNG Gas Agreement, writes Russell Searancke.

Momentum stalled on the US$15 billion project when the new government said it would review the gas agreement, which was finalised in April 2019 by the joint venture and the previous government.

The new government went silent on the terms and scope of the proposed review but this week Petroleum & Energy Minister, Kerenga Kua, said the Cabinet (National Executive Council) had met to discuss the review carried out by a state negotiating team.

He said the Cabinet had "agreed in principle that the state should stand behind the signed agreement in the best interest of the state".

“However, the state has reserved its rights to discuss a shortlist of matters to be discussed with the developers. We believe that what we have discussed and agreed to are favourable and will not affect the general economics and fiscal terms of the Papua LNG Gas Agreement. However, those matters are of relevance to the state and this will be placed on the table for consideration by the joint venture partners,” said Kua.

More discussions between the two sides are under way and should not take more than two weeks to conclude, he added.

There are three separate projects in PNG that are interlinked — the Total-led Papua LNG project, the ExxonMobil-led P’nyang gas project and the three-train expansion of the ExxonMobil-led PNG LNG facility.

Total and ExxonMobil both said in the past week they did not expected the Papua LNG Gas Agreement to be changed.

Nevertheless, joint venture partner Oil Search expressed relief that the Cabinet had agreed to stand behind the agreement.

“Oil Search is committed to supporting the operator of Papua LNG and the government, in resolving any final questions on the Papua LNG Gas Agreement,” said Oil Search chief executive Peter Botten.

He added that the way is clear now for finalising the P’nyang Gas Agreement, and that the Papua LNG and PNG LNG joint ventures could proceed with front-end engineering and design work.

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Support for PNG projects