Total confirms suspension of work on Mozambique LNG project

MOZAMBIQUE – French energy giant Total has confirmed it is suspending work on a massive US$20 billion gas project in northern Mozambique following the latest jihadist assault on a nearby town in March 2021.

“Considering the evolution of the security situation, Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site,” the company said in a statement.

Total added that it was declaring a “force majeure” situation beyond its control, a legal concept meaning it can suspend fulfilling contractual obligations.

A March 24, 2021, jihadist raid on Palma in Mozambique’s northern Cabo Delgado province prompted Total to remove remaining staff from the natural gas site.

It had already evacuated some workers and suspended construction in January 2021 following a series of jihadist attacks nearby.

Few days ago, the Confederation of Economic Associations of Mozambique (CTA) said Total had suspended contracts with a series of businesses indirectly involved in the gas project.

CTA president Agostinho Vuma said at the time that Total had assured that the gas project would resume “once it is safe”, although the energy company itself declined to comment.

Gas-rich Cabo Delgado has been battered by a bloody jihadist insurgency since 2017.

The violence has killed at least 2,600 people and displaced nearly 700,000, raising doubts over the viability of the biggest single investment in Africa even before the latest raid.

March’s attack on Palma took place just 10 kilometres (six miles) from the gas project’s nerve centre, despite a government commitment to set up a 25-kilometre security radius around the site.

Dozens were killed in the assault, according to provisional government tallies.

Hundreds of others, including many foreign workers, were evacuated by air and sea while thousands of locals walked to nearby districts.

“Considering the evolution of the security situation, Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site”

Total

In June 2020, Total has signed a US$14.9 billion senior debt financing agreement for its massive liquefied natural gas (LNG) project in Mozambique, the biggest project financing ever in Africa.

Mozambique LNG is one of several projects being developed in the country’s northernmost province of Cabo Delgado after one of the biggest gas finds in a decade off its coast. Together, the projects are worth some US$60 billion.

Rival Exxon Mobil delayed the final investment decision on its nearby Rovuma LNG gas project due to the coronavirus pandemic, and Mozambique expects the decision in 2022.

Mozambique LNG’s project financing includes direct and covered loans from eight export credit agencies (ECAs), 19 commercial bank facilities, and a loan from the African Development Bank, Total said in a statement.

UK Export Finance (UKEF) was among the ECAs contributing to the financing, alongside the Export Import Bank of the United States, Italy’s SACE, the Netherlands’ Atradius, the Export Credit Insurance Corporation of South Africa, Japan Bank for International Cooperation, Nippon Export and Investment Insurance, and the Export-Import Bank of Thailand.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE

Other Recent Posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.