Papua Parliament Passes 4 Amendments Ahead of Expected $14.5 Billion Foreign Investment
Key Facts
Papua New Guinea’s parliament unanimously passed 4 legislative amendment bills on October 22, a move Prime Minister James Marape said paves the way for expected foreign direct investment of $14.5 billion through the Papua LNG project. Marape said the amendments implement financial arrangements negotiated to support investment while protecting the country’s long-term interests. The vote puts the project on track toward a final investment decision, but does not mean that a decision has been made. The government has set December 15, 2026, as the target date for that decision. Completing procedures involving landowners and provincial governments remains part of the work required before reaching that stage.
One arrangement centers on an oil-price-linked benefit-sharing mechanism, with a neutral benchmark of $81 per barrel. The mechanism provides temporary support when prices fall and an additional premium for the state when they rise. The government set a separate cap of $1.95 billion for both the support and the premium. It said the amendments do not include a permanent reduction in corporate income tax rates or production levies. It also confirmed that royalty rights and development levies owed to landowners and provincial and local governments remain fully protected.
Enhanced government benefits include changes to royalty calculations and arrangements for domestic gas pricing. The agreement also provides discounted gas for community power generation at Caution Bay and gives the state an option to acquire an additional 2.5% participating interest in the project. Alongside the price mechanism, these provisions place the state’s financial and social arrangements within the package of amendments passed by parliament. Marape said the aim is to underpin the negotiated financial understandings while supporting investment. Landowner and local and provincial government rights remain part of the framework the government has pledged to protect.
The expected $14.5 billion in foreign investment differs from the project’s capital expenditure. TotalEnergies said on September 7 that expected capital expenditure had been reduced to about $14 billion, following savings of nearly $4 billion since 2024. The company attributed the savings to an improved project design and the re-tendering of construction packages. It said engineering, procurement and construction tenders had been completed, and contract award recommendations were ready for partner approval. These steps provide financial and operational context for the project ahead of the investment decision, without determining its outcome.
Operation of Papua LNG is due to be transferred to ExxonMobil, operator of the PNG LNG project, in a move TotalEnergies said aims to maximize synergies for the project. TotalEnergies will sell a 9.1% stake, retaining a 20% stake after the ownership restructuring. The project targets production of about 5.6 million tonnes of liquefied natural gas a year, from 11 wells, including 9 production wells, a water injection well and a carbon dioxide reinjection well. Total liquefaction capacity is 6 million tonnes a year, including 2 million tonnes using existing PNG LNG trains for processing fees. Marketing arrangements also include a joint venture to market 2.4 million tonnes a year, with 1.5 million tonnes a year available for TotalEnergies to purchase.
Gulf and Central provinces had earlier reached a key 80:20 benefit-sharing arrangement on October 7, which the government described as a milestone on the way to a final investment decision. Marape said the government wants to make substantial progress on landowner and provincial agreements before November, to give partners confidence to move toward the decision and financing. The target date, December 15, 2026, remains contingent on completing outstanding procedures with landowners and provincial governments. The prime minister said the project is being advanced amid global economic, financing and geopolitical uncertainty. These steps place local agreements and commercial decisions among the remaining stages before the investment is finalized.