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Total declares force majeure on Mozambique LNG after at...

Newsdeck

Newsdeck

Total declares force majeure on Mozambique LNG after attacks

Pemba airport, where injured displaced people from Palma, who took refuge in Afungi, have been airlifted to, among them women in labor, adults and children suffering gunshot wounds, among other injuries sustained in attacks by rebel groups, in Pemba, Mozambique, 30 March 2021. Since Sunday, several boats, private and others organized by Total and the authorities, have been transporting people from Palma, in a number that should already be over 2,000, but without official confirmation. EPA-EFE/ESTEVAO CHAVISSO
By Reuters
26 Apr 2021 0

PARIS, April 26 (Reuters) - French energy group Total has declared force majeure on its $20 billion Liquefied Natural Gas (LNG) project in Mozambique and confirmed it had withdrawn all staff from the construction site after Islamic State-linked insurgent attacks last month.

* Force majeure follows Islamic State-linked attacks in March

* Total, Exxon and others have projects in Mozambique

* Mozambique was hoping to rival Qatar and Australian LNG (Updates after news conference)

By Sudip Kar-Gupta

Dozens of civilians were killed in March in the coastal Mozambique town of Palma, near gas projects that are worth $60 billion and are aimed at transforming the East African nation’s economy.

The attacks have dealt a blow to plans by Total and rival Exxon Mobil, which also has an LNG project in Mozambique, to turn the country into a major LNG producer to rival Australia, Qatar, Russia and the United States.

It also comes as major energy companies reassess their approach to LNG, once seen as a fuel of the future because it has lower emissions than coal or oil but now under scrutiny in the drive to cut carbon emissions even more deeply.

“Considering the evolution of the security situation … Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site. This situation leads Total, as operator of Mozambique LNG project, to declare force majeure,” the company said on Monday.

Total, which aimed to produce its first cargo from the project in 2024, suspended work on March 27 after the militant attack.

Declaring force majeure implies a weightier suspension and allows Total to cancel contractors.

Carlos Zacarias, chairman of the institute that governs Mozambique’s energy development, told a news conference that Total would not fulfil contractual obligations while the force majeure was in place.

He added that Total has not abandoned the project.

Mozambique President Filipe Nyusi this month said the government would work to restore peace.

The LNG project includes development of the Golfinho and Atum natural gas fields in the Offshore Area 1 concession and the construction of a two-train liquefaction plant with capacity of 13.12 million tonnes per annum (mtpa).

Total secured a $14.9 billion debt financing package in July to fund its rollout. On Monday the company said it had agreement from the lenders to pause the debt drawdown.

It also said it was too early to provide an updated project schedule, though there was speculation among some contractors that the delay could last at least a year.

(Reporting by Dominique Vidalon, Sudip Kar-Gupta and Sarah White in Paris, Manuel Mucari in Maputo, Alex Winning and Emma Rumney in Johannesburg Writing by Dmitry Zhdannikov Editing by David Goodman and Edmund Blair)

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