Biodiversity Risk Now Blocks Gas Project Financing
Oil and gas operators and lenders should treat habitat threats as a capital constraint on frontier LNG projects.
Updated on Nov. 2, 2026 in Oil and Gas
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Conservation group CELCOR has warned ExxonMobil that the Papua LNG project threatens the Bulmer's fruit bat and other species in Papua New Guinea. ExxonMobil agreed in September to take over as operator, and a deal in October gave it control of the project, which affects energy firms and operators tied to liquefied natural gas development.
Why it matters
The project would tap gas fields discovered more than a decade ago and move output through a 320km pipeline to a coastal processing plant. At least 32 banks and export credit agencies have ruled out financing it, a signal that environmental and biodiversity risk is now a direct constraint on capital for oil and gas projects.
The project is designed to produce 5.6 million tonnes of LNG annually, with a 320km pipeline linking gas fields to a coastal facility. The project area includes 27 terrestrial species already at risk of extinction, and at least 32 banks and export credit agencies have declined to finance it.
The players
ExxonMobil
A large integrated oil and gas company with global upstream, LNG and downstream operations, now assuming operatorship of Papua LNG.
TotalEnergies
A major French integrated energy company that previously served as operator of the Papua LNG project before handing responsibility to ExxonMobil.
CELCOR
A conservation organization that raised biodiversity concerns with ExxonMobil over the project's threat to the Bulmer's fruit bat.
International Union for Conservation of Nature (IUCN)
The global body that maintains the Red List of threatened species and which estimates the Bulmer's fruit bat population at fewer than 200 adults.
The details
The Papua LNG footprint passes through densely forested landscapes, floodplains and mangrove-covered coastlines. Building the 320km pipeline to a coastal processing facility would place construction and operations directly in these habitats. Operators weighing similar projects now face biodiversity review that can close off project financing before construction starts.
Timeline
September: ExxonMobil agreed to take over as operator of Papua LNG from TotalEnergies.
October: ExxonMobil struck a deal to take control of the project.
November 2: CELCOR warned ExxonMobil about risks to the Bulmer's fruit bat.
December: A final government decision on the project is expected.
Market Landscape
Financing refusals by at least 32 banks and export credit agencies show biodiversity risk now shaping whether oil and gas projects can secure capital, not just whether they can get permits. ExxonMobil's assumption of operatorship from TotalEnergies illustrates how major operators reshuffle stakes in contested frontier gas developments.
Operators in oil and gas should factor biodiversity and financing risk into project timelines, since at least 32 lenders have already ruled out this one. Procurement and environmental compliance teams should expect heavier scrutiny of pipeline routing through sensitive habitats.
The takeaway
Project financing is increasingly gated by biodiversity screening, so operators should treat habitat risk as a capital constraint from the start. Track the government decision on Papua LNG expected in December as a signal for how similar frontier projects will be judged.
What happens next
A final government decision on the Papua LNG project is expected in December, which will determine whether the project proceeds.
Further reading
For broader context on how energy firms are handling project development and the industry's regulatory pressures, see the Oil and Gas section.
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