The Mozambican government said Monday that Exxon had assured it would continue with its natural gas projects in the north of the country in the face of reports that the company is rethinking its business portfolio in fossil fuels.
“On the part of the companies, including Exxon, the indication we got was to reaffirm the Afungi project, even after the news that was put into circulation,” said Mozambique’s Minister of Mineral Resources and Energy, Max Tonela.
Tonela said that representatives of the US oil company were due to visit Maputo in early November to assess the situation in relation to projects in Mozambique.
“We have been exchanging information with Exxon and another meeting is scheduled in Maputo at the beginning of November,” he said.
The Wall Street Journal reported last week that Exxon is studying the possibility of cancelling investments such as the one planned for northern Mozambique, citing pressure from investors to limit its focus on fossil fuels.
The issue at stake is a reduction in carbon emissions and at the same time increasing returns to investors, as investment in mega-projects such as Cabo Delgado takes several years to reach maturity.
According to sources cited by the Wall Street Journal, it is not clear that these discussions will lead to a decision on investment in Mozambique, which is still awaiting a Final Investment Decision, after which the project is irreversible, failing which the penalties will outweigh the investment costs.
Exxon has already spent US$2.8 billion (2.4 billion euros) to acquire a major position in the Area 4 project in the Rovuma basin, the biggest natural gas exploration project in sub-Saharan Africa, but for several years it has put off a final decision on the investment, which according to the Mozambican government may be between US$27 and US$33 billion (23.2 and 28.3 billion euros).
Cabo Delgado province is rich in natural gas but has been terrorised since 2017 by armed rebels, with some attacks claimed by the extremist group Islamic State.
The conflict has led to more than 3,100 deaths, according to the ACLED conflict registration project, and more than 817,000 displaced people, according to Mozambican authorities.
Since July, an offensive by government troops with support from Rwanda which was later joined by the Southern African Development Community (SADC) allowed for increased security, recovering several areas where there was rebel presence, including the town of Mocímboa da Praia, which had been occupied since August 2020.