Delayed $20 billion Mozambique LNG project restart in sight amidst humanitarian crisis

Francois de Beaupuy, Bloomberg May 23, 2023

(Bloomberg) – TotalEnergies SE and partners in a liquefied natural gas (LNG) project in Mozambique agreed to contribute millions of dollars into the local economy, signaling that the long-delayed development may soon get under way again.

The companies will set up a $200 million foundation to foster economic growth, Total said Tuesday. The French firm, keen to resume construction after an Islamic State-linked insurgency forced a halt over two years ago, also cited an independent report showing improvements in the local humanitarian situation.

Total is “one step closer to a Mozambique LNG restart,” analysts at Jefferies said in a research note. “The human rights report confirms improvements in the security conditions in the Cabo Delgado area while providing validation of the Mozambique LNG project relating to its social impact.”

The Mozambique LNG venture, 26.5% owned by Total, will set up a dedicated foundation for socioeconomic development in Cabo Delgado, the company said in a statement. It also said arrangements for the relocation of local families and associated compensation will be re-examined, and payments accelerated.

The $20 billion LNG project — an amount surpassing Mozambique’s entire gross domestic product — could be transformational for the country, but progress has been stymied by waves of militant attacks.

Following improvements in the security situation over the past year, the report “recommends reviewing the framework of relations between Mozambique LNG and the Mozambican Defense Forces,” Total said. “Mozambique LNG has started a dialogue with the Mozambican authorities to this end.”

Total said back in February it would consider resuming construction depending on the findings of the report, but the focus now turns to costs. The partners’ outlay must not increase following the two-year hiatus, Total said last week — potentially a difficult ask since global inflation has surged.

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