TotalEnergies has told Mozambique that the costs of its liquefied natural gas (LNG) project in the country have risen by $4.5bn in the four years it was on hold, and it wants its production agreement extended by a decade, a letter from its CEO shows.
The French oil major had confirmed on Saturday that with its partners it had decided to lift force majeure on the project, which was halted in 2021 by an Islamist militant attack and was previously estimated to cost $20bn.
Government budget approval
But before construction can restart, Mozambique’s council of ministers needs to approve an updated budget and schedule.
“This revised budget’s approval shall cover the incremental costs incurred by the project due to the force majeure, which amount to $4.5bn,” the letter from TotalEnergies CEO Patrick Pouyanne to Mozambique President Daniel Chapo shows.
The country’s oil and gas regulator is devising its own estimate of the project’s additional costs and has not said when that will be ready.
Pouyanne’s letter, dated October 24 and seen by Reuters, says the prolonged halt to the project’s development has pushed out the expected first LNG cargo to the first half of 2029, from an initial target of July 2024.
“To compensate partially [for] the economic impact of the extended force majeure … the concessionaire respectfully requires the government to grant an extension of the term of the Golfinho-Atum development and production period … by a duration of 10 years.”
TotalEnergies declined to comment. A spokesperson for the Mozambique president did not immediately respond to a request for comment.
Security concerns linger
The LNG project is 40% complete, though insurgent attacks have continued despite Mozambique signing a new security pact with Rwanda, whose military has helped secure the area where the plant is being developed.
ExxonMobil is developing a separate project nearby.
The remaining work will take place in “containment mode” with workers only allowed in by air or sea, TotalEnergies said at a September 29 investor day.
Mozambique LNG is owned by TotalEnergies (26.5%), Japan’s Mitsui (20%), ENH (15%), Bharat Petroleum (10%), Oil India (10%), ONGC Videsh (10%) and Thailand’s PTT Exploration & Production (8.5%).
Reuters
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