President of the Republic Daniel Chapo indicated that the liquefied natural gas (LNG) project led by France’s TotalEnergies may resume operations as early as this month of January, a move that could restore an important source of revenue for the country, which is facing financial difficulties, according to a Bloomberg publication.
The information was shared by the Head of State during a visit to the United Arab Emirates, at the invitation of his counterpart Mohammed bin Zayed Al Nahyan. In his remarks, Chapo noted that there are signs of a resumption of construction activities at the project site, located in Area 1 of the Rovuma Basin, in Cabo Delgado province, northern Mozambique.
In November, the government decided to extend the concession period of the LNG megaproject by four and a half years, rejecting TotalEnergies’ initial proposal, which had requested a ten-year extension.
The French oil company’s request was made as a form of compensation for losses accumulated during the four years of forced suspension of activities, estimated at USD 4.5 billion. The information is contained in a letter sent by the company’s Chief Executive Officer, Patrick Pouyanné, to President Daniel Chapo, in which the decision to lift the “force majeure” clause—activated in 2021 following armed attacks in Cabo Delgado—is also announced.
According to a source cited at the time by Lusa, a resolution was approved at a Council of Ministers meeting which, “in accordance with current regulations, establishes the reinstatement of the LNG project’s suspended period due to ‘force majeure’, ensuring the recalculation of the 30-year development term and preserving, under the law, the elements of the original development plan.” The resolution also defines the “need to assess all expenses incurred during the ‘force majeure’ period with technical rigor and transparency, ensuring the protection of the public interest and contractual predictability, through an independent audit that includes the right to an adversarial process, prior to approval of the final report.”
Last year, TotalEnergies considered that security conditions were in place for the full resumption of the Mozambique LNG project. Through a document, the concessionaire “respectfully” requested that the Executive authorize an extension of the Development and Production Period of the Golfinho-Atum field by an additional decade, emphasizing that such a measure would allow it to “partially offset the economic impact” caused by the prolonged interruption of operations.
The letter, disclosed by Lusa, also mentions the need to “optimize the financial obligations” of the National Hydrocarbons Company (ENH), Mozambique’s state-owned partner in the consortium led by TotalEnergies.
As a final condition before relaunching the project, the concessionaire says it is awaiting government approval of an addendum to the Development Plan, which includes a revised budget and timeline. According to the oil company, the update reflects the additional costs incurred due to events classified as “force majeure,” totaling the aforementioned USD 4.5 billion.
Patrick Pouyanné recalled that between 2021 and 2024 the government carried out an audit of the financial consequences of the suspension, whose report the company expects to receive “as soon as possible.” According to the letter, the prolonged period of inactivity had a direct impact on the project’s schedule, postponing the first delivery of liquefied natural gas (LNG) at the Afungi facility—initially scheduled for July 2024—to the first half of 2029. Consequently, the Development and Production Period will be extended by a further four and a half years.
The Mozambique LNG project represents an investment of around USD 20 billion and is considered the largest private venture currently underway in the country. Estimated production stands at 13 million tonnes per year of LNG, with development already about 40% complete, according to data provided by TotalEnergies.
Mozambique has three approved development projects for the exploitation of natural gas reserves in the Rovuma Basin—classified among the largest in the world—all located offshore the coast of Cabo Delgado province.
A study by consultancy Deloitte indicates that Mozambique’s vast natural gas reserves could generate up to USD 100 billion in revenues by 2040, making the country one of the world’s ten largest producers and accounting for 20% of Africa’s LNG production.
Source: Diário Económico
