Why must landowners commit to a benefit-sharing agreement before the financing is secured when the financing structure determines what benefits actually exist?

by PAUL L. KEBAIJA

TotalEnergies has finally said the quiet part out loud, and it said it to the people with the most at stake. Speaking to landowners in Port Moresby this week, Papua LNG managing director Arnaud Berthet called the project the most complex thing one could encounter in this industry, extremely complex to prepare, develop and operate. He was gracious about the hosts: without the landowners, he said, there is no project and no development. Then he turned to the money, and the graciousness gave way to something far more revealing.

External financing, Berthet conceded, is not a given. The project is expensive even for companies of Total's size and its partners'. Banks must be shown every necessary guarantee before they will extend credit, and the company has spent years assembling documentation and due diligence across resource, technical and marketing dimensions to get them comfortable. The banks, he said, are now entering a credit process, sitting down to determine whether or not they will participate at all.

And then: “My guess is that yes, they will, so we are good.”
A guess. Seven years after the Gas Agreement, six years past the original FID target, with an EPC scope settled and marketing under way, the developer's position on the single largest precondition for this project is an expression of optimism. Not a signed mandate. Not a term sheet. Not financial close. A guess.

Set that against what is publicly known. Twenty-nine banks and export credit agencies have formally excluded Papua LNG. Crédit Agricole, the project's own original financial adviser, walked in 2024. All four Australian majors that helped fund PNG LNG have ruled this one out, as have the French banks that did the same. ING and Rabobank joined the list this year after a formal complaint to the Equator Principles Association alleging breaches across climate, biodiversity and human rights standards. Japan's MUFG now carries the mandate, canvassing a visibly narrower field. When the developer says the banks are still deciding whether to participate, he is describing a syndicate that does not yet exist.

None of which means the project is dead. Total and ExxonMobil can construction-fund from their balance sheets if they choose, and Japanese and Korean export credit agencies, following their own EPC contractors, remain uncommitted rather than opposed. But that is a very different project from the one being described in these meetings. Sponsor-funded or ECA-dominated financing changes the cost of capital, the leverage, and ultimately the fiscal calculus that determines what flows back to Gulf Province.

Which brings us to the sentence Berthet delivered next, and the reason landowners should read this whole speech twice. Without a development agreement at the end of the Development Forum, he said plainly, there is no FID. The State needs the landowners to sign. The developer needs the licences that only follow that signature. Both are pressing for a resolution on a timetable that the financing has not yet earned.

So here is the question worth putting to both the company and the State: why must landowners commit to a benefit-sharing agreement before the financing is secured, when the financing structure determines what benefits actually exist? If the syndicate narrows and the cost of capital rises, the project economics that underwrite every royalty and equity promise made in that forum shift, after the signatures are collected, not before.

Berthet was right about one thing above all. This is a lifetime project, as he told the landowners, for their sons and grandsons. Lifetime commitments should not be signed against a guess. Papua New Guineans are entitled to see the credit process concluded, the syndicate named, and the terms disclosed, before anyone is asked to sign away four generations of land.

Ask for the mandate letter. Not the reassurance.

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