TotalEnergies CEO Reports Positive Progress on $20 Billion Mozambique LNG Project

TotalEnergies CEO Patrick Pouyanné has reported 'positive progress' towards resuming the $20 billion natural gas megaproject in Mozambique's Cabo Delgado province. This announcement follows a recent meeting with President Filipe Nyusi. Despite the optimism, no specific deadline has been set for the project's restart.

The Mozambique LNG project has been under force majeure since April 2021 due to security concerns. Recent insurgent attacks in the region have further complicated the situation. Two separate attacks were reported in Cabo Delgado at the end of last week, coinciding with the withdrawal of a southern African peacekeeping force that had been deployed to the region for nearly three years.

During the meeting, Pouyanné expressed concern over the recent insurgent attack on Macomia town in Cabo Delgado. Despite these challenges, he reported that security in the north of the province is 'well under control' and that normal life has returned to Palma, the town neighboring the LNG project site. Some work has already resumed in Palma, and the project's restart will be gradual.

The Mozambique LNG project, led by TotalEnergies, was suspended in early 2021 after insurgents attacked Palma and killed some staff subcontracted to the project. The project's costs are estimated to be over $20 billion, with $14.9 billion in debt financing agreed upon by banks and export credit agencies in 2021. However, this financing was put on hold when the project was suspended.

Negotiations with export credit agencies to resume financing the project are 'progressing well,' according to Pouyanné. Satellite imagery shows that major construction work has been underway at the Afungi project site since December 2023. Pouyanné emphasized that the restart of the project will be step-by-step, cautioning against expecting a 'big bang.'

TotalEnergies is the sole operator of the Mozambique LNG project with a 26.5% stake. Other shareholders include Mozambique's ENH, Japan's Mitsui & Co., Thailand's PTTEP, and Indian firms ONGC Videsh, Bharat Petroleum, and Oil India Ltd. Italian energy services group Saipem, a key partner in the project, has also reported progress towards the project's restart, but no deadline has been set.

Saipem CEO Alessandro Puliti recently visited the project site and reported that the relocation activity is almost completed and that the social sustainability work by the Mozambique joint-venture is impressive. Puliti mentioned that they are negotiating with subcontractors regarding the additional costs for the project's restart.

TotalEnergies mandated Jean-Christophe Rufin, an expert in humanitarian action and human rights, to carry out an independent mission to assess the humanitarian situation in the province before deciding on the restart of operations. This assessment is crucial for ensuring the project's alignment with human rights standards.

Despite the positive progress reported, the exact timeline for the Mozambique LNG project's restart remains uncertain. Pouyanné's cautious approach underscores the complexity and sensitivity of resuming operations in a region still grappling with security challenges.

Key Takeaways

• TotalEnergies CEO reports "positive progress" towards resuming Mozambique LNG project.
• Project has been under force majeure since April 2021 due to security concerns.
• No specific deadline set for project restart despite recent meeting with President Nyusi.
• Security in northern Cabo Delgado "well under control" with normal life returning to Palma.
• Negotiations with export credit agencies to resume financing are "progressing well".