Santos deepens stake in PNG's Papua LNG as ExxonMobil set to take operator role

A major restructuring is underway on Papua New Guinea's Papua LNG project, with ExxonMobil poised to take over as operator and Santos moving to significantly grow its ownership position before the venture's final investment decision later this year.

Santos boss Kevin Gallagher said handing operatorship to ExxonMobil — which already runs the PNG LNG project — would bring the two ventures into closer alignment and improve how they are executed on the ground.

The plan, agreed between TotalEnergies and ExxonMobil, sees operatorship pass to ExxonMobil PNG Antelope Limited, accompanied by TotalEnergies offloading part of its participating interest to the other partners in the joint venture, proportional to what they already hold.

The revised equity split leaves Santos with 21 per cent of Papua LNG, up from 17.7 per cent, and ExxonMobil holding 34.1 per cent, up from 28.7 per cent. ENEOS Xplora edges up from 2 per cent to 2.4 per cent, while TotalEnergies' stake drops sharply from 29.1 per cent to 20 per cent. The State of PNG's 22.5 per cent holding remains unchanged.

Alongside the operatorship transfer, Santos has locked in a separate binding agreement to purchase an additional 3.3 per cent interest in PRL15 and Papua LNG from TotalEnergies, a deal that depends on regulatory approval and the project reaching final investment decision. Santos will pay close to US$189 million — about K811 million — for the stake, taking its overall participating interest to 21 per cent once the State's back-in is factored in.

That extra interest is expected to boost Santos' equity LNG production from the project to roughly 1.2 million tonnes per annum, a move the company frames as consistent with its strategy of expanding around infrastructure it already knows while capturing more of the growing Asian LNG market. The deal remains subject to regulatory conditions and a final investment decision penciled in for the last quarter of 2026, with the acquisition taking effect from January 1, 2027.

"The Papua LNG project is a world-class development, strategically positioned to supply premium Asian markets and offering multiple value streams for Santos," Gallagher said. "ExxonMobil brings a proven track record of project delivery and reliable operations in PNG, including PNG LNG, and is expected to realise significant synergies by operating both the upstream and midstream project scopes.

"The Papua LNG project will provide reliable, low-cost production for years to come and Santos is prepared to increase its investment accordingly."