The International Monetary Fund (IMF) estimates that TotalEnergies’ liquefied natural gas (LNG) megaproject, in the Rovuma basin, Cabo Delgado province, northern Mozambique, will go ahead this year, with the first exports expected within four years.
The financial institution, quoted on Friday 19 July by Lusa, recalled that ‘with a view to improving security in the north, the French oil company carried out an assessment of the human rights situation in May 2023 and developed an action plan that establishes a basis for local socio-economic development’.
According to the IMF, although the company has not yet announced the official resumption of the development phase, it is expected soon, once the project’s funding is secured.
“In the meantime, the Coral Sul FLNG project led by Italy’s Eni, which began production at the end of 2022, is assumed to have reached 70 per cent of annual capacity by 2023, and almost full capacity by 2024. As a result, we predict that Mozambique’s public revenues from natural gas exports will initially be small, standing at less than 0.1 per cent of Gross Domestic Product (GDP) in 2023, and could reach 0.6 per cent of GDP in 2028,’ he said.
In May, the CEO of TotalEnergies, Patrick Pouyanné, recognised that there had been ‘positive progress’ towards the resumption of the French multinational’s natural gas megaproject in the province of Cabo Delgado, but without committing to deadlines.
‘We’re working on it and it’s best to continue gradually,’ said Patrick Pouyanné, questioned by journalists in Rwanda after a meeting with Mozambican President Filipe Nyusi, in which the status of TotalEnergies’ 20 billion dollar (1.2 trillion meticals) project was analysed, as well as security in Cabo Delgado, given the insurgent attacks that continue to take place.
“We discussed the conditions for resuming the project in Cabo Delgado. I believe we have made positive progress with all the contractors and, from that point of view, we are ready to resume. We are also working with all the financiers to resume financing the project, and everything is progressing well,’ added the head of the French multinational.
At the beginning of the month, the International Monetary Fund guaranteed that it would immediately disburse another 60 million dollars (3.7 billion meticals) in support to Mozambique, under the country’s assistance programme.
“Meanwhile, the Coral Sul FLNG project led by Italy’s Eni, which began production at the end of 2022, is expected to reach 70 per cent of annual capacity in 2023, and almost full capacity in 2024.As a result, we forecast that Mozambique’s public revenues from natural gas exports will initially be small, standing at less than 0.1 per cent of Gross Domestic Product (GDP) in 2023, and could reach 0.6 per cent of GDP in 2028.”
‘The executive board concluded the regular consultation process with Mozambique for 2024 and the fourth review of the Extended Credit Facility (ECF) agreement 36 months ago, allowing an immediate disbursement equivalent to 60.03 million dollars usable for budget support, bringing total disbursements to the country to 330.1 million dollars,’ the institution said in a statement.
According to the financial organisation, the three-year ECF agreement aims to support Mozambique’s economic recovery and reduce public debt and financing vulnerabilities, while promoting higher and more inclusive growth through structural reforms.
The deputy managing director of the International Monetary Fund, Bo Li, recognised that the Mozambican authorities’ efforts to ensure fiscal discipline are welcome.
“Further fiscal consolidation is necessary, given the country’s high debt and tight financing conditions. In this regard, revenue mobilisation and the rationalisation of wage bill expenditure are essential to create fiscal space for high-priority social and development spending. Improving the execution of social spending and avoiding future arrears remains fundamental,’ he said.
This programme was approved in May 2022 and provides total funding of 456 million dollars to Mozambique.
Mozambique has three development projects approved to exploit the natural gas reserves of the Rovuma basin, classified as among the largest in the world, all located off the coast of Cabo Delgado province.
Two of these projects are larger and involve channelling the gas from the seabed to land, cooling it in a plant and then exporting it by sea in a liquid state.
One is led by TotalEnergies (Area 1 consortium) and work progressed until it was suspended indefinitely after the armed attack on Palma in March 2021, when the French energy company declared that it would only resume work when the area was safe. The other is the still unannounced investment led by ExxonMobil and Eni (Area 4 consortium).
A third completed, smaller project also belongs to the Area 4 consortium and consists of a floating platform for capturing and processing gas for export, directly at sea, which started up in November 2022.
