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Area 1: TotalEnergies Warns that Decision to Restart Natural Gas Project “Will Depend on Costs”

Area 1: TotalEnergies Warns that Decision to Restart Natural Gas Project “Will Depend on Costs”

The chief executive of French oil company TotalEnergies said last week, in a telephone conversation with several analysts and investors revealed by Bloomberg, that the return to work in Cabo Delgado, in northern Mozambique, cannot be rushed and will partly depend on the costs of natural gas exploration.

Patrick Pouyanne, the head of the French oil company that is leading the investment project of over US$20 billion in Cabo Delgado province, thus made it clear last Thursday, 9 February, that the costs of the project, which is currently suspended due to insecurity, will be important in the decision being made about a return to Mozambique.

In addition to the project’s costs, namely the renegotiation of contracts with local suppliers and subcontractors, there is also the issue of human rights which, according to the official, will also be a fundamental part of the decision.

“I want to have a clear vision on the issue of human rights,” added Patrick Pouyanne, referring to the report he commissioned on the human rights situation in northern Mozambique.

Pouyanne’s statements come about a week after a visit to the north of the country made with the President of the Republic, Filipe Nyusi.

“Based on a recent visit to Mozambique, Pouyanne said that things are back to normal from a security point of view and stressed that the decision [to return to work or suspend investment] is a decision of all partners in the project,” Bloomberg wrote.

“TotalEnergies has tasked Jean-Christophe Rufin with assessing the situation in Cabo Delgado, producing a report by the end of February to decide whether there are conditions to resume construction of the natural gas liquefaction plant.”

In the conversation, the leader of the French oil company rejected the idea that there will have to be a choice between returning to Mozambique or betting on the liquefied natural gas market, stating that “we are ready and have the capacity to finance both.”

At the beginning of this month TotalEnergies commissioned Jean-Christophe Rufin to assess the situation in Cabo Delgado, producing a report by the end of February to assess whether conditions exist to resume construction of the natural gas liquefaction plant, to be extracted from the Rovuma basin, 40 kilometres from the coast.

Mozambique has three development projects approved to exploit the natural gas reserves in that location, classified among the largest in the world. Two of those projects are larger and envisage channelling the gas from the seabed to land, cooling it in a plant to export it by sea in a liquid state.

One is led by TotalEnergies (the Area 1 consortium) and work progressed until it was suspended indefinitely after an armed attack on Palma in March 2021, when the French energy company said it would only resume work when the area was safe.

The province of Cabo Delgado has been plagued by conflict since 2017 that has terrorised the population. Armed rebel groups have looted and massacred villages and towns across the province and a variety of attacks have been claimed by the ‘arm’ of the self-proclaimed Islamic State in that region.

The conflict has already caused more than 4000 deaths (data from The Armed Conflict Location & Event Data Project) and at least one million displaced people, according to an assessment made by the Mozambican authorities.

Since July 2022, a military offensive by Maputo, with support from Rwanda and later SADC, allowed for a climate of greater security in the region that had not been felt for years, and recovered localities that were controlled by the rebels, such as the town of Mocímboa da Praia, which had been occupied since 2020.

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