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TotalEnergies’ LNG Project Faces Delay Beyond 2029 Due to Insecurity in Mozambique

TotalEnergies’ LNG Project Faces Delay Beyond 2029 Due to Insecurity in Mozambique

French multinational TotalEnergies has once again postponed its 20 billion dollar liquefied natural gas (LNG) project in Mozambique – one of the most promising in Africa – citing security concerns in the province of Cabo Delgado and recent outbreaks of political violence in the country.

According to information published by the Financial Times and reproduced by Reuters, the megaproject has been suspended since 2021, when an Islamic insurgency attacked the Cabo Delgado region in the north of the country, killing dozens of civilians in a town near the company’s construction site. These events forced the company to declare force majeure and withdraw its staff from the area.

Although it was planned to resume operations by the end of 2024, the worsening violence following the presidential elections on 9 October led to a further postponement of the project and forced the closure of several companies, leaving more than 12,000 Mozambicans unemployed.

‘The priority is to restore peace and security in Cabo Delgado and an end to ‘force majeure’. The functioning of public services and the return to normal life are necessary for the project to resume,’ added the French company.

Recently, TotalEnergies made it known that it is also waiting to see how the elected Mozambican president, Daniel Chapo, will deal with the violent political crisis that has already resulted in dozens of deaths, as well as how the ruler ‘will work with the thousands of Rwandan soldiers tasked with protecting the province of Cabo Delgado.’

Post-election protests

Mozambique ‘does not want to re-evaluate agreements’ with TotalEnergies and ExxonMobil

Meanwhile, in an interview with Reuters, Chapo said that Mozambique does not intend to review the contractual terms with TotalEnergies or ExxonMobil regarding the liquefied natural gas (LNG) projects in the Rovuma basin.

Chapo, who took office after months of opposition protests against his election victory, said that Mozambique is counting on the energy projects of the two oil companies and others to revolutionise the Mozambican economy and put public finances, which are currently unstable, on a stronger foundation.

‘At the moment, they [TotalEnergies] are making investments, the contracts are new, so in these cases there is no room to review contracts, because they haven’t even come into force in terms of operation,’ he explained.

Delayed US funding

Funding issues are also behind the delay in restarting activities. Last year, the Export-Import Bank (Exim) of the United States of America (USA) postponed its decision to grant financial support to the project.

The official return of US President-elect Donald Trump to the White House on 20 January will ‘inevitably’ lead to the replacement of the entire board of directors of the US export credit agency.

However, the CEO of TotalEnergies, Patrick Pouyanné, hopes that the pro-hydrocarbon tendency of the new Republican administration will make it easier to validate the Exim Bank guarantee, as this is essential support, given that the import-export bank of the Netherlands and others are also waiting for the green light from their American counterpart before deciding to invest.

Daniel Chapo

Mozambique has three development projects approved to exploit the natural gas reserves in 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.

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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.

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