Banks Shun $15b PNG Gas Project

Major Banks Shun $15 Billion Papua New Guinea LNG Project Amid Environmental Concerns

A growing number of international financial institutions are refusing to back a significant liquefied natural gas (LNG) project in Papua New Guinea (PNG), citing environmental and climate risks. This burgeoning boycott now includes an additional 12 banks, adding to the 15 institutions that had previously pledged to steer clear of the $15 billion venture.

The Papua LNG project, a substantial undertaking aimed at developing PNG’s second-largest gas resource, has found itself increasingly isolated from mainstream financial support. Among the early signatories to the financing boycott were all of Australia’s “big four” banks: Commonwealth Bank, ANZ, NAB, and Westpac. These institutions, along with other credit agencies, had already committed to not providing funds for the project, which is being led by French energy giant TotalEnergies.

The list of dissenting banks has now expanded to include prominent international players such as ING, Rabobank, and Standard Bank, alongside the Swedish Export Credit Corporation. This development was highlighted by five environmental advocacy groups in a joint announcement this week.

Will van de Pol, Chief Executive of Market Forces, a prominent environmental finance watchdog, noted the significance of this shift. “Many of the world’s major banks, including all of Australia’s big four, are recognising the growing risks and have ruled out funding the Papua LNG project, leaving MUFG (Japan’s Mitsubishi UFJ Financial Group) and other Japanese banks isolated,” he stated. This suggests a potential divergence in risk assessment between Australian and some Japanese financial institutions regarding the project.

Project Overview and Investment Landscape

The proposed Papua LNG facility, spearheaded by TotalEnergies, is envisioned as a four-train LNG plant situated adjacent to ExxonMobil’s existing facility in Caution Bay. The plant is designed to have a liquefaction capacity of four million tonnes of gas per year.

The project’s journey has been marked by several delays, with a final investment decision now pushed back multiple times. The current timeline indicates that a decision on whether to proceed with the project is anticipated later in 2026.

The ownership structure of the joint venture is as follows:
* TotalEnergies: Holds a significant 40.1 per cent stake.
* ExxonMobil: Owns 37.1 per cent of the venture.
* Santos: An Australian energy company, holds a 22.8 per cent interest.

TotalEnergies has previously articulated the strategic advantage of the proposed plant’s location, emphasizing its ideal positioning to supply LNG to Asian markets. The company has pointed out that Asia remains heavily reliant on coal for approximately 85 per cent of its electricity generation, suggesting LNG as a potentially cleaner alternative.

However, the project has faced considerable opposition from various stakeholders. Papua New Guinean officials have publicly declared the project as being of “national significance,” underscoring its perceived importance for the country’s economic development.

Environmentalists Raise Alarm Bells

Conversely, environmental activists and local communities have voiced strong objections, warning of potentially disastrous consequences for PNG’s population, its delicate ecosystems, and the global climate. They argue that proceeding with the project would not only exacerbate climate change but also violate numerous voluntary standards that banks typically adhere to when evaluating the social and environmental impacts of large-scale infrastructure investments.

Peter Bosip, Executive Director for PNG’s Center for Environmental Law and Community Rights, expressed deep concern about the long-term implications of financing such a project. He drew a stark analogy, stating that “financing the project was like borrowing against the future.”

Bosip elaborated on the potential costs: “Our land, sea, forests, reefs and communities will pay the debt long term after gas is gone.” This sentiment highlights the perceived intergenerational inequity, where the immediate economic benefits of the gas extraction are outweighed by the lasting environmental degradation and the burden placed upon future generations.

Both TotalEnergies and Santos have been approached for comment regarding the expanding bank boycott and the concerns raised by environmental groups. The continued refusal of major financial institutions to fund the project underscores the increasing scrutiny and pressure on companies to align their investments with global climate goals and sustainable development principles. The isolation of remaining potential financiers like MUFG suggests a growing consensus among a significant portion of the global banking sector to disassociate from high-carbon fossil fuel projects.