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TotalEnergies has informed the Mozambican government that costs for its liquefied natural gas (LNG) project have increased by around USD 4.5 billion during the four-year suspension period caused by militant unrest. The French energy company, along with its partners, recently decided to lift the force majeure imposed in 2021 and requested the government to extend its production agreement by ten years. Before construction resumes, Mozambique's council of ministers must approve the revised budget and timeline, reflecting the additional costs resulting from the extended disruption.
TotalEnergies has notified the government of Mozambique that its liquefied natural gas (LNG) project in the country has experienced a cost escalation of approximately USD 4.5 billion following a four-year suspension. The company, alongside its partners, confirmed earlier this week that it had lifted the force majeure declared in 2021 after an Islamist militant attack forced work to halt. The project, previously valued at around USD 20 billion, now awaits approval of an updated budget and schedule from Mozambique's council of ministers before construction can recommence. Advertisement
In a letter addressed to Mozambique's President Daniel Chapo, TotalEnergies' Chief Executive Patrick Pouyanné stated that the revised budget should include the additional expenses incurred during the suspension period. The correspondence further highlighted that the extended delay has postponed the project's expected first LNG output to the first half of 2029, instead of the earlier target of July 2024. Pouyanné also indicated that, to partly mitigate the financial impact of the prolonged force majeure, the company has requested the government to extend the production period for the Golfinho-Atum development by ten years.
Mozambique's oil and gas regulator is independently assessing the project's additional cost estimates and has yet to specify when its findings will be finalised. TotalEnergies has chosen not to comment on the matter, while the office of the Mozambican president has not issued a response.
The project, located in the northern Cabo Delgado province, is around 40% complete. However, insurgent activity continues despite a new security agreement with Rwanda, whose forces have been instrumental in securing the development zone. TotalEnergies mentioned during an investor meeting held late last month that the remaining construction would proceed in "containment mode," with personnel being transported exclusively by air or sea for safety reasons.
The Mozambique LNG project is jointly owned by TotalEnergies, holding a 26.5% stake, Japan's Mitsui with 20%, Mozambique's ENH with 15%, Bharat Petroleum and Oil India with 10% each, ONGC Videsh with 10%, and Thailand's PTTEP holding 8.5%. Meanwhile, ExxonMobil continues to develop a separate LNG venture in the vicinity.
TotalEnergies' request for an extended production period and the significant increase in project costs mark a pivotal stage in the future of Mozambique's LNG development. While security concerns persist in Cabo Delgado, government approval of the revised budget and schedule will be critical for resuming construction. The extension, if granted, is expected to help offset the financial strain caused by years of disruption. The project's eventual completion could re-establish Mozambique's position as a key emerging LNG exporter, provided stability and operational progress continue.
Source - Reuters
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