TotalEnergies’ $20 billion Mozambique liquefied natural gas (LNG) project is being delayed due to disagreements with contractors over increased costs, the company said on Thursday.
Following assaults in Mozambique’s northern Cabo Delgado area in 2021, the LNG project, in which the French energy giant has a large 26.5% stake, was halted.
As the security situation in Mozambique has improved, TotalEnergies CEO Patrick Pouyanne told investors on Thursday that the next step before restarting Mozambique LNG was financial considerations.
“We need the contractors to be reasonable; some of them are not… and have tried to take advantage of the situation,” Pouyanne said. We cannot afford to pay any further costs beyond those spent as a consequence of having to restart the project after an unexpected stop. That is the current scenario.
Total contracted energy services provider Saipem is to be ready for a restart in July, and Mozambique President Filipe Nyusi declared last week that the Cabo Delgado region was safe enough for the project to resume.
The French corporation has stated that it would wait for a commissioned report on the humanitarian situation on the ground before making any final choices with project partners.
On Wednesday, a TotalEnergies spokeswoman said that the study was still in the works and that an update would not be issued until later in the month.
The first LNG shipment was planned to arrive in 2024, with annual gas output reaching 43 million metric tons.
Pouyanne said on Thursday that he was not worried about the project’s delay since no customers who had previously signed contracts to absorb the gas had abandoned their agreements.
Pouyanne noted that there is some market interest, and the project’s position on the Indian Ocean helps a lot. “If some buyers prefer to withdraw, we are ready to take more,” he said.
Total’s plan, together with $60 billion in energy investments, would radically change Mozambique’s present $15 billion economy.
Mozambique LNG is also owned by ENH of Mozambique, Mitsui & Co. of Japan, PTTEP of Thailand, and three Indian businesses (ONGC Videsh, Bharat Petroleum, and Oil India Ltd.).