Due to the recent attack in Palma, the oil company is keeping “the main contracts” of the natural gas project in Cabo Delgado. Only contracts with “subcontractors” are being cancelled.
Mozambique’s Minister for Mineral Resources and Energy said Thursday that oil company Total is keeping the “main contracts” of the natural gas project in Cabo Delgado, with only contracts with “subcontractors” being cancelled.
There are several subcontractors that are being demobilised, and they are mainly contracts that will be easily demobilised when it is decided to resume [the project],” said Max Tonela.
The minister was speaking after the second and final day of a question session with the government in Parliament. The main contracts with French multinational company Total will be maintained, he added.
The minister justified the cancellation of contracts between Total and suppliers with the need to reduce costs resulting from the stoppage of construction work on the project, due to the recent armed attack on the town of Palma, almost six kilometres from the area of the natural gas exploration project led by Total in Cabo Delgado.
The time that [the development] is at a standstill carries high costs for the project,” he said.
Regarding the re-launch of Total’s activities, he stressed that it would depend on the re-establishment of security. The Minister of Mineral Resources and Energy told MPs that everything is being done for the restoration of safety in the area of natural gas projects, advancing that Total’s works are “suspended” and “not abandoned.”
“On Total’s project in Afungi, we can assure you that the Government is working towards the restoration of security in the areas affected by the terrorist attacks in Cabo Delgado,” Max Tonela said.
The Bloomberg financial information agency reported that French oil company Total is cancelling contracts with local contractors and suppliers for the natural gas project in northern Mozambique, leaving companies in difficulties and indicating that the project may stop for months.
Citing documents exchanged between the French oil company and some local suppliers, the agency noted that Total is cancelling contracts with local suppliers such as Julio Sethi, a Palma-born businessman who has invested in buying land, a quarry and transport in Pemba, the capital of Cabo Delgado province.
“It’s a total disaster, we don’t know what will happen next,” said the businessman, considering it unlikely that the French oil company will resume work this year due to insecurity in the region, affected by attacks since 2017, the last of which was in March, increasing the humanitarian crisis in the region.
Armed groups have terrorised Cabo Delgado since 2017, with some attacks claimed by jihadist group Islamic State, in a wave of violence that has led to more than 2,500 deaths, according to the conflict registration project ACLED, and 714,000 displaced people, according to the Mozambican government.
The most recent attack was on March 24 against the town of Palma, causing dozens of deaths and injuries, in a still ongoing assessment.
The Mozambican authorities regained control of the town, but the attack led oil company Total to abandon indefinitely the site of the gas project scheduled to start production in 2024 and on which many of Mozambique’s economic growth expectations for the next decade are anchored.
