TotalEnergies has informed the Mozambican government that the cost of its liquefied natural gas (LNG) project in the country has risen by $4.5 billion during the four years it was on hold and has requested a 10-year extension to its production agreement, according to a letter from the company’s chief executive.
The French energy company confirmed on Saturday that, together with its partners, it had lifted the force majeure on the project, which was suspended in 2021 following an Islamist militant attack.
The project, previously estimated at $20 billion, cannot yet resume construction until Mozambique’s council of ministers approves an updated budget and schedule, Reuters reported.
“This revised budget’s approval shall cover the incremental costs incurred by the project due to the force majeure, which amount to $4.5 billion,” TotalEnergies CEO Patrick Pouyanné wrote in a letter to Mozambique President Daniel Chapo.
The letter, dated October 24 and seen by Reuters, also indicated that the extended suspension has pushed the project’s first LNG shipment to the first half of 2029, a delay from the original target of July 2024.
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“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,” Pouyanné wrote.
Mozambique’s oil and gas regulator is conducting its own assessment of the additional project costs but has not stated when its findings will be released.
TotalEnergies declined to comment, and a spokesperson for the Mozambican president did not immediately respond to requests for comment.
The Mozambique LNG project is currently about 40% complete. Despite the government’s recent security agreement with Rwanda, whose military has been instrumental in stabilizing the area, insurgent attacks have persisted near the site. TotalEnergies has stated that remaining work will continue in “containment mode,” meaning that workers will only be transported by air or sea for safety reasons.
A separate LNG project nearby is being developed by ExxonMobil.
The Mozambique LNG venture is jointly owned by TotalEnergies with a 26.5% stake, Japan’s Mitsui with 20%, Mozambique’s ENH with 15%, Bharat Petroleum with 10%, Oil India with 10%, ONGC Videsh with 10%, and Thailand’s PTTEP holding 8.5%.
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Image Credit: Reuters
