Mozambique: Government says Total’s “main contracts” will be maintained

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Mozambique: Government says Total’s “main contracts” will be maintained

3:20 CAT | 23 Apr 2021

in file CoM

The Minister of Mineral Resources and Energy of Mozambique said on Thursday that oil company Total would maintain the “main contracts” of the natural gas project in Cabo Delgado, with only contracts with “subcontracted companies” being cancelled.

“There are several subcontracted companies that are being demobilised, but they are, above all, easy ‘re-mobilisable’ when the project is resumed,” Max Tonela said, after the second and last day of questions to the government in the Assembly of the Republic.

The minister explained the cancellation of contracts between Total and suppliers on the basis of the need to reduce costs resulting from the stoppage of the construction works of the enterprise following the recent attack on the town of Palma, just six kilometres from the natural gas project in Cabo Delgado.

“The stoppage time [of the project] entails high costs for the project,” he said, adding that the resumption of Total’s activities would depend on the reestablishment of security.

The Minister of Mineral Resources and Energy told deputies that everything possible was being done to restore safety in the area of the natural gas project, and that the Total project was “suspended” and “not abandoned”.

“Regarding the Total project in Afungi, we can guarantee that the government is working to restore security in the areas affected by the terrorist attacks in Cabo Delgado,” Max Tonela said.

Financial information agency Bloomberg reported on Wednesday that Total was cancelling contracts with local contractors and suppliers to the natural gas project in northern Mozambique, leaving companies in difficulties, and indicating that the project may be on hold for months.

Citing documents exchanged between the French oil company and some local suppliers, the agency said that Total was cancelling contracts with local suppliers like Júlio Sethi, a businessman born in Palma who invested in the purchase of land, a quarry and transportation in Pemba, the capital of Cabo Delgado province.

“It is a total disaster. We do not know what will happen next,” the businessman said, adding that it was unlikely that the French oil company would resume work this year because of insecurity in the region, affected by attacks since 2017, the last of which, in March, increased the severity of the humanitarian crisis in the region.

Also read: Total suspends contracts linked to Mozambique gas project: business group

Armed groups have terrorised Cabo Delgado since 2017, with some attacks claimed by the jihadist group Islamic State, in a wave of violence that has already caused more than 2,500 deaths, according to the ACLED conflict registration project, and 714,000 people displaced, according to the Mozambican government.

The most recent attack, on March 24, was carried out against the town of Palma, causing dozens of deaths and injuries in numbers yet to be ascertained.

Also read: Mozambique: Total LNG project suspended, not abandoned – Carta

Mozambican authorities regained control of the town, but the attack led oil company Total to indefinitely abandon the main construction site of the gas project scheduled to start production in 2024 and on which many of Mozambique’s expectations for economic growth in the next decade are based.

Source: Lusa