Papua New Guinea has signed a revised Papua LNG Project Agreement aimed at strengthening the project’s commercial viability while protecting the State’s long-term fiscal interests, with a firm deadline now set for a Final Investment Decision (FID) by 15 December 2026.
Petroleum Minister Jimmy Maladina said the revised agreement follows detailed negotiations between the Government and Papua LNG project participants and provides a targeted fiscal support mechanism designed to address weaker market conditions without permanently reducing the State’s overall fiscal take.
“This is a balanced transaction, not a giveaway,” Maladina said. “The arrangement recognises the commercial realities facing a project of this scale while ensuring Papua New Guinea retains appropriate protection and participates in the upside when market conditions are stronger.”
The fiscal mechanism is temporary, reciprocal and capped, with safeguards intended to protect government revenues over the longer term. Royalty and development levy payments to landowners, provincial governments and local-level governments will remain protected under the revised arrangements.
A key component of the negotiated package is an option for a State nominee to acquire an additional 2.5 per cent interest in Papua LNG, on top of the State’s existing entitlement under Section 165 of the Oil and Gas Act.
The associated PNG LNG arrangements will also provide an improved wellhead-value basis for calculating royalty and development levy payments, potentially strengthening the revenue base for government and project-area stakeholders.
The package further includes cheaper gas for domestic electricity generation and free gas to generate up to one megawatt of discounted electricity for landowner communities in and around Caution Bay.
The Government views Papua LNG as a major investment capable of generating construction and operational employment, contracts for local businesses, infrastructure development and substantial future government revenue.
.jpg)
For Papua New Guinea’s private sector, a move into development would create opportunities across construction, logistics, transport, accommodation, catering, engineering, security and other supporting services.
Maladina said the Government’s objective during negotiations was to establish a commercially viable pathway to development while maintaining safeguards for the State.
“Papua LNG represents a major investment in Papua New Guinea. It has the potential to generate employment, business opportunities, infrastructure investment and substantial future government revenue,” he said.
FID deadline
The revised arrangements are conditional on Papua LNG achieving an affirmative FID by 15 December 2026.
Maladina described the date as a “drop-dead deadline”, signalling that the negotiated fiscal arrangements are intended to secure a firm investment commitment rather than provide an open-ended concession.
“The State has provided this negotiated pathway for one clear purpose: to secure a firm investment commitment and move Papua LNG into development,” he said.
The signing now shifts attention to the project participants and the remaining work required to reach FID. If achieved, the decision would mark a significant step towards construction and development of another major gas investment in PNG, with potential flow-on impacts for government revenues, employment, local contracting and infrastructure spending.
For the Government, the immediate priority is therefore to convert the revised agreement into a firm investment decision by the December deadline while ensuring the State and affected communities retain an appropriate share of the project’s long-term economic benefits.
