Extremist threats deal blow to Mozambique’s LNG plans

French energy group Total on Monday declared force majeure on its $20 billion Liquefied Natural Gas (LNG) project.
Monday 26/04/2021
Internally displaced people arrive in Pemba on April 1, 2021, from the boat of evacuees from the coasts of Palma, Mozambique, after extremist attacks. (AFP)
Internally displaced people arrive in Pemba on April 1, 2021, from the boat of evacuees from the coasts of Palma, Mozambique, after extremist attacks. (AFP)

PARIS – French energy group Total on Monday declared force majeure on its $20 billion Liquefied Natural Gas (LNG) project in Mozambique and withdrew all personnel from the site after Islamic State-linked insurgent attacks last month.

Dozens of civilians were killed in March in the coastal Mozambique town of Palma, near gas projects worth $60 billion that are aimed to transform Mozambique’s economy.

The attacks have dealt a blow to plans by Total and rival Exxon Mobil, which also has an LNG project in Mozambique, to turn the African nation into a major LNG producer to rival Australia, Qatar, Russia and the United States.

It also comes as major energy firms reassess their approach to LNG, once seen as a fuel of the future because it has lower emissions than coal or oil but now subject to re-evaluation in the drive to cut carbon emissions even more deeply.

“Considering the evolution of the security situation … Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site. This situation leads Total, as operator of Mozambique LNG project, to declare force majeure,” the company said.

Total, which aimed to produce its first cargo from the project in 2024, suspended work on March 27 after the militant attack.

Declaring force majeure implies a weightier suspension and allows Total to cancel contractors.

Force majeure was “the only way to best protect the project interest until work can resume,” a Total spokeswoman added.

Mozambique President Filipe Nyusi this month said the government would work to restore peace in the country after last month’s militant attack near the multibillion-dollar gas projects backed by global oil companies.

French energy group Total will resume construction at its liquefied natural gas project in northern Mozambique when the security situation is guaranteed, the chairman of Mozambique’s National Petroleum Institute said on Monday.

He added that Mozambican authorities were working to restore “normal security conditions” so activities at the Total site could resume very soon and that Total had not completely abandoned the project.

The LNG project includes development of the Golfinho and Atum natural gas fields in the Offshore Area 1 concession and the construction of a two-train liquefaction plant with capacity of 13.12 million tonnes per annum (mtpa).

Total is operator of the Mozambique LNG project and obtained a $14.9 billion debt financing package in July to fund its rollout.