TotalEnergies LNG Project in Mozambique Hits New Financial Snag
The government of Mozambique may not agree with the latest estimate for an LNG project led by TotalEnergies, which said earlier this week the price tag for the facility had gone up by $4.5 billion.
The French supermajor attributed the cost increase to the four years, during which work on Mozambique LNG was suspended following a deadly attack by Islamist militants that promoted a force majeure. TotalEnergies lifted the force majeure this week but said the delay had caused a significant cost increase and asked the local government to extend the construction and production timetable for the project by 10 years as partial compensation, Reuters reported earlier today.
“We will have to sit down and perceive in detail the foundations for this extension, ... there may also be counter-arguments from the government,” Mozambique’s president Daniel Chapo said. he added that the government will go through the cost calculations for the project and “on our side, there will also be, without any doubt, counter-arguments.”
Mozambique LNG, which originally had a price tag of $20 billion, was going to be the biggest LNG project in Africa and also the biggest foreign investment in the continent. When completed, the facility would have an annual capacity of 13.12 million tons, sourced from two offshore fields, Golfinho and Atum.
Yet another liquefied natural gas project in Mozambique took the crown for biggest investment in African LNG. Led by Exxon, Rovuma is set to cost $30 billion and have annual capacity of 18 million tons. The project has yet to receive its final investment decision, which Exxon plans to do in the first quarter of 2026, after getting security guarantees from the Mozambican government. The area where both Mozambique LNG and Rovuma are located attracts militants, with recent reports suggesting a flare-up of violence.
Exxon Cancels Mozambique LNG Update
Exxon has canceled a public appearance by several executives scheduled for today, at which they were supposed to reaffirm the company’s commitment to the Rovuma LNG project, currently frozen, in the company of Mozambique’s president, Daniel Chapo.
The $30-billion facility that will be the biggest LNG export hub in Africa once completed has yet to receive a final investment decision, mainly due to the unstable security situation in the Cabo Delgado region, where both Rovuma and TotalEnergies’ Mozambique LNG are located. Mozambique LNG was under force majeure until this month when the French supermajor lifted it.
However, the Financial Times suggested in a report today on Exxon’s cancellation of the joint Rovuma briefing that the security situation may well be the reason for that cancellation. The publication cited multiple calls for both LNG projects to be delayed because Islamist insurgents are active in the area.
“The security situation has got much worse,” the FT cited a senior adviser with Oxfam as saying. “People are talking about attacks happening on a nightly basis on highways around the [Rovuma] project. I just don’t understand how you can have a genuine conversation on whether or not this project moves forward in this context,” Andrew Bogrand said.
Islamist activity in Mozambique has plagued the country’s energy plans for years. Until relatively recently, the Rwandan army was working in tandem with forces from the Southern African Development Community to contain the insurgents, but these withdrew from the security mission in Mozambique after money for payments for the security services provided started running out.
According to one conflict monitoring organization and the UN Refugee Agency, extremist activity has intensified in northern Mozambique, with the organization, Acled, reporting 22 deaths in the week to October 26 and the UNRA reporting 100,000 people fled their homes because of the violence.
By Irina Slav for Oilprice.com
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