Suspension of works delays Mozambique LNG production start to 2026 – Fitch

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Suspension of works delays Mozambique LNG production start to 2026 – Fitch

8:06 CAT | 27 Apr 2021

in file CoM

Consultancy Fitch Solutions on Monday postponed its forecast of the start of natural gas production in Mozambique by oil company Total by two years, warning that “it is more and more likely that there will be more delays”.

“Total’s suspension means that we now expect a significant delay in the start of the project, and we have revised our estimate of the start of gas production for the Mozambique LNG project to 2026, a two-year delay compared to our previous forecast of 2024,” the Fitch analysts write.

In a comment sent to clients, to which Lusa has had access, the consultancy, which is controlled by the owners of the financial rating agency of the same name, writes that, “given the uncertainties regarding the resolution of insurgent attacks, additional delays to this calendar are increasingly most likely.”

The analysts’ statements come on the same day that Total declared ‘force majeure’ in its removal of workers and suspension of the natural gas exploration project in Cabo Delgado, northern Mozambique.

“Force majeure brings more uncertainty about ExxonMobil’s Final Investment Decision on the Rovuma LNG project in neighbouring Area 4,” the analysts note, concluding that although there are risks in both projects, the Mozambican government’s interest in moving the projects forward and the companies’ desire to profit from the country’s gas “should not result in any cancellation of the projects, despite the fact that security risks remain critical”.

At stake is the declaration of ‘force majeure’ in the withdrawal of personnel working on the
Total-led natural gas exploration project on the Afungi peninsula in northern Mozambique, on which rest high hopes for the financing the country’s future economic development.

The oil company had already told Lusa on Monday morning that “in the current environment, Total cannot continue to operate in the province of Cabo Delgado in a safe and efficient manner, so all project personnel have been removed from the site and will not return until conditions permit”.

The company “remains committed to Mozambique and to the development of the Area 1 project when conditions permit, and will continue to monitor the evolution of the situation with great attention, in close contact with the authorities,” company spokeswoman Anastasia Zhivulina said when asked if the declaration of ‘force majeure’ implied the suspension or the cancellation of the project.

Anastasia Zhivulina said that “force majeure’ has been declared because Total was “unable to fulfil its obligations as a result of the severe deterioration of the security situation in Cabo Delgado, an issue that is completely out of Total’s control”.

Valued at €20 billion, the gas project is the largest private investment underway in Africa.

A week after the March 24 attack on Palma, the district headquarters town, the oil company withdrew all personnel and indefinitely vacated the Afungi peninsula, just six kilometres to the south.

Source: Lusa