TotalEnergies says the Mozambique Liquefied Natural Gas project cost has risen to $4.5 billion
TotalEnergies told Mozambique in a letter that costs for its LNG project had risen $4.5 billion over the past four years. It also wants to extend its production agreement by 10 years.
The French oil giant confirmed Saturday that it, along with its partners, had decided to lift the force majeure for this project. It was stopped in 2021 due to an islamist militant attack.
Before construction can resume, Mozambique’s Council of Ministers must approve an updated budget.
The letter sent by TotalEnergies CEO Patrick Pouyanne, to Mozambique's President Daniel Chapo, stated that "This revised budget approval will cover the incremental costs of the project incurred due to force majeure which total $4.5 billion."
First production expected in first half of 2029
The oil and gas regulator of Southern Africa is preparing its own estimate for the additional costs associated with this project. However, it has not yet announced a date by which that estimate will be available.
Pouyanne’s letter, dated 24 October and seen by, stated that the extended halt in the project’s development has pushed back the expected first LNG shipment to the first half 2029 from an original target of July 2024.
"To partially compensate (for) economic impact from the extended force majeure, the concessionaire respectfully requests the government to extend the period of Golfinho-Atum production and development by 10 years."
Work will continue in a 'containment mode'
TotalEnergies refused to comment. A spokesperson for Mozambique's president did not respond immediately to a comment request.
The LNG project has reached 40% completion, but insurgent attacks continue despite Mozambique's signing of a new security agreement with Rwanda, which helped secure the area that the plant is developing.
Exxon Mobil has a separate project in the area.
TotalEnergies said at a 29 September investor day that the remaining work would be done in "containment" mode, with only air or maritime workers allowed to enter.
TotalEnergies is the largest shareholder in Mozambique's LNG, with 26.5%, followed by Japan's Mitsui (20%). ENH (15%). Bharat Petroleum (10%). Oil India (10%). ONGC Videsh (10) and Thailand's PTTEP (8.5%). (Reporting and additional reporting by America Hernandez, edited by Alexander Winning & David Holmes).
(source: Reuters)
