TotalEnergies and its partners have lifted the force majeure on the Mozambique LNG project, paving the way for construction to resume. The initial suspension of the project was declared in 2021 following an Islamist militant attack near the construction site in the Cabo Delgado The decision to lift the suspension came after TotalEnergies CEO Patrick Pouyanné and Mozambican President Daniel Chapo reached an agreement. A key point of negotiation was how to handle the approximately $4.5 billion in additional costs incurred during the four-year shutdown.
The government reportedly agreed to allow the consortium to claim some of these added costs against future taxes. To further compensate for the economic impact of the long delay, TotalEnergies requested a 10-year extension to the project’s production and development period.
While TotalEnergies has officially lifted the force majeure, the project’s full relaunch is pending approval from Mozambique’s council of ministers for an updated budget and development plan.
The project, which was about 40% complete at the time of the halt, is now expected to begin producing its first liquefied natural gas (LNG) in 2029, a delay of around five years.
All remaining work will be done in “containment mode,” with workers transported by air or sea for security reasons. Security measures have been reinforced in the area, and around 4,000 workers are already on-site for rehabilitation work.
The resumption of TotalEnergies’ project is expected to influence ExxonMobil’s decision on its neighboring Rovuma LNG project, which had been awaiting this development.
Economic significance:
The Mozambique LNG project, one of the largest private investments in the country’s history, is seen as a key to boosting the economy of the impoverished nation. However, ongoing insurgent activity in the region means providing long-term security remains a critical concern.
Note by Alessandro Bazzoni