Mozambique: Excitement builds at prospect of TotalEnergies resuming LNG operation

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Mozambique: Excitement builds at prospect of TotalEnergies resuming LNG operation

9:05 CAT | 02 Feb 2023

File photo: O País

Mozambique’s private business sector is excited at the prospect of TotalEnergies and partners resuming activity on the Mozambique LNG project, suspended in April 2021 because of terrorism in Cabo Delgado province, in the north of the country.

Excitement aside, the private sector, represented by the Confederation of Economic Associations of Mozambique (CTA), says that resumption alone is not enough to comment on. What the CTA wants to see is the contribution of the TotalEnergies project to the national economy.

“The effective contribution to the country, the impact, the externalities that come out of this resumption, that is what interests us. If the contribution is positive, our impression will also be positive,” said Félix Machado, Chair of the Department of Fiscal Policy and International Trade at the CTA.

After the ‘force majeure’ suspension of the Mozambique LNG project, orders were cancelled and many subcontracted companies damaged, the CTA notes. In this context, the CTA says, TotalEnergies left many debts, which are still being paid almost two years later.

“It is a complicated process which is still being resolved. Many companies invested in the process, but then went bankrupt. But this announcement of the resumption brings oxygen to the private sector, as there is the possibility of paying these debts, and it also allow suppliers to restart their activities,” said Machado.

He added that a meeting between CTA and TotalEnergies is expected in the next few days, although the CTA has not yet received an official communication.

According to the ‘Africa Intelligence’ periodical, TotalEnergies CRO Patrick Pouyanné arrives in Cabo Delgado within days, and is expected to discuss the resumption of work on the liquefied natural gas (LNG) mega-project on the Afungi peninsula. In addition to a stopover in Maputo, Pouyanné will travel to Palma, in the north of Cabo Delgado province.

This visit to the country demonstrates TotalEnergies’ “wish to relaunch that project, which has been made easier by the significant improvement in security in the region. After two years of total stoppage, the first relatively modest contracts for excavation and construction were awarded in December to the South African company WBHO”.

The head of TotalEnergies is due to announce details of the resumption of work in Cabo Delgado, Africa Intelligence writes.

Since July 2021, the Rwandan Defense Force (RDF) and the Southern African Development Community Military Mission in Mozambique (SAMIM), of which South Africa is the main troop contributor, have managed to repel several dozen terrorists. and restore order and state authority in several districts affected by terrorism in Cabo Delgado.

This follows the global context of post-war gas supply problems in Ukraine, which is putting pressure on major Western gas companies to launch new liquefaction trains as soon as possible.

The resumption of work on the Mozambique LNG project, in Area 1 of the Rovuma Basin, has not yet been officially communicated by either TotalEnergies or the government of Mozambique.

Even so, it is a “breath of fresh air” for the executive led by Filipe Nyusi, who has several times criticized the delay of TotalEnergies and other companies in resuming activities in Cabo Delgado, despite the relative calm secured by the Defence and Security Forces of Mozambique, and its Rwandan and SADC allies.

“In this context, it is our expectation that development activities will be resumed by the Area 1 concessionaires,” President Nyusi said at a conference in Maputo in September, 2022.

Meanwhile, as ‘Carta’ has learned, TotalEnergies will require the formation of an exclusive protection force, composed of the various military actors operating on the ground. TotalEnergies will also force the Mozambican government to accept incorporating the budget of this force in the recoverable investment costs.

Source: Carta de Moçambique