KEY POINTS
- Mozambique’s President Daniel Chapo says his government may challenge TotalEnergies’ revised $20.5 billion LNG budget and request for a 10-year contract extension.
- TotalEnergies estimates project costs have risen by $4.5 billion since work was halted in 2021 due to militant attacks.
- The LNG project, 40% complete, remains under security pressure despite new defence cooperation with Rwanda.
Mozambique’s government has hinted at possible resistance to TotalEnergies’ revised budget and timeline for its liquefied natural gas, LNG, project, signalling that the country may not easily approve the French energy giant’s fresh proposals.
President Daniel Chapo said on Thursday that his administration intended to review the company’s request in full detail before taking a position. “We will have to sit down and perceive in detail the foundations for this extension. There may also be counter-arguments from the government,” Chapo remarked during a press conference in Maputo.
TotalEnergies, which leads a consortium developing one of Africa’s largest LNG projects in northern Mozambique, recently told the government that the overall cost of the development had increased by about $4.5 billion during the four-year suspension caused by Islamist militant attacks in Cabo Delgado in 2021. The company and its partners are now seeking a ten-year extension on the development and production phases to offset the financial impact of the delay.
Government and company brace for renewed negotiations
President Chapo noted that the government would also examine the proposed rise in costs, adding that “on our side, there will also be, without any doubt, counter-arguments.” His comments underscore the likelihood of a new round of complex negotiations between the Mozambican authorities and the French energy group over how to proceed with the stalled multibillion-dollar investment.
TotalEnergies has yet to publicly respond to the president’s remarks. Its chief executive, Patrick Pouyanne, told investors last week that the Mozambique LNG project could restart swiftly, with the overall budget now pegged at around $20.5 billion.
Although roughly 40% of the project has been completed, persistent militant violence continues to threaten security in the gas-rich northern province. Mozambique recently signed a new security agreement with Rwanda to strengthen protection around the Afungi site, where the plant is being developed.
ExxonMobil, which is pursuing a separate LNG venture in the same region, has also been monitoring the security and fiscal conditions closely as it considers investment decisions of its own.
The eventual resolution between TotalEnergies and the Mozambican government will likely determine not only the future of the country’s LNG ambitions but also the pace at which it can attract foreign investment back to its energy sector after years of disruption.
