Insurgency May Threaten Mozambique's LNG Ambitions

Researched by Industrial Info Resources (Sugar Land, Texas)--Total SE's (Paris, France) withdrawal of personnel from its Mozambique liquefied natural gas (LNG) site in Afungi amid ongoing violence, and a subsequent force majeure declaration, have placed a cloud over the country's LNG ambitions.

An attack by an Islamist insurgency group on the outskirts of the town of Palma near the Mozambique LNG construction site last month caused Total to announce this week it was pulling all of its personnel from the site due to ongoing issues concerning a lack of security. The $20 billion project has not been abandoned completely and at best could just be delayed and not cancelled. The Mozambique government expected the 12 million-ton-per-annum (MTPA) project to generate revenues of about $100 billion over 25 years, according to Bloomberg. The sudden hold on the project will definitely impact its cost as well.

This is not the only LNG project that the country is relying on, and other developers will be keeping a close eye on the situation. There are other ongoing LNG projects in the region like the 3.4 MTPA Coral floating liquefied natural gas (FLNG) project and the associated production infrastructure in Area 4 developed by Exxon Mobil Corporation (ExxonMobil) (NYSE:XOM) (Irving, Texas) and ENI S.p.A. (NYSE:E) (Rome, Italy), which is under construction and due for commissioning in first-quarter 2022. Although this is primarily an offshore development, it will still rely an onshore base for logistics support.

The other project is the 15.2 MTPA onshore Rovuma LNG facility, jointly led by ENI and ExxonMobil; development is well down the road, with anticipation of full funding in early 2022. However, the onshore project is somewhat distanced from the part of Palma that was attacked, being situated near Quionga and close to the border with Tanzania, although still in the Cabo Delgado region where the conflict is occurring.

Total also suspended offshore activities at the Golfinho-Atum fields in Area 1, which would supply gas to Mozambique LNG's first two trains.

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