French energy giant TotalEnergies and its consortium partners have officially lifted the force majeure suspension on their $20 billion liquefied natural gas project in Mozambique, four years after a devastating Islamist militant attack brought construction to a complete halt in March 2021.
In a letter dated October 24 to Mozambican President Daniel Chapo, TotalEnergies CEO Patrick Pouyanne revealed the project’s costs have ballooned by $4.5 billion due to the extended suspension, pushing the total investment to at least $24.5 billion. The company is now requesting a decade-long extension of its production agreement to compensate for the economic impact of the prolonged halt.
“This revised budget’s approval shall cover the incremental costs incurred by the project due to the force majeure, which amount to $4.5 billion,” Pouyanne wrote, adding that the first LNG cargo is now expected in the first half of 2029, nearly five years behind the original July 2024 target.
However, the project cannot restart until Mozambique’s council of ministers approves an updated budget and schedule, with the country’s oil and gas regulator currently developing its own estimate of the additional costs. The delay comes as Mozambique’s government and project shareholders negotiate how the substantial cost overruns should be divided.
The Mozambique LNG project represents the largest private investment in Africa’s energy infrastructure and is expected to generate thousands of jobs while potentially making the country one of the world’s biggest LNG exporters. The African Development Bank estimated in 2018 that Mozambique possesses more than five trillion cubic metres of gas, enough to supply Britain, France, Germany and Italy for 20 years.
Despite the restart announcement, security concerns persist in the northern region where the facility is being developed. While no attacks matching the scale of the March 2021 incident, which resulted in around 800 deaths, have occurred since, the United Nations reported some 633 attacks against civilians this year. To address ongoing threats, remaining construction will proceed in “containment mode,” with workers only permitted access by air or sea.
The 13 million tonne-per-year project is already 40 percent complete, with contracts secured to sell nearly 90 percent of future output to long-term buyers including China’s CNOOC, France’s EDF, and British major Shell. A portion of the gas is reserved for Mozambique’s state energy company ENH.
Mozambique LNG is owned by TotalEnergies with a 26.5 percent stake, alongside Japan’s Mitsui at 20 percent, ENH at 15 percent, and Indian and Thai partners holding the remainder. The project’s resumption is closely watched by US oil giant ExxonMobil, which is weighing its own separate Rovuma LNG project in the same region and has indicated its decision hinges on TotalEnergies’ progress.
Sources: channelafrica.co.za, borneobulletin.com.bn, bairdmaritime.com