French energy major Total has declared a force majeure at its $20bn liquefied natural gas (LNG) project in Mozambique and withdrawn all personnel from the site amid growing violence in the area.
Conflicts linked to extremist insurgencies in the northern Cabo Delgado region have escalated since March, resulting in numerous reported deaths and what the UN has termed a “large and likely long-lasting humanitarian crisis”.
Total acquired a 26.5% interest in the LNG project for $3.9bn in 2019, and had been aiming to deliver first production by 2024.
“Considering the evolution of the security situation in the north of the Cabo Delgado province in Mozambique, Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site,” the company said in statement. “This situation leads Total, as operator of Mozambique LNG project, to declare force majeure.”
In announcing a force majeure, Total has effectively put the entire project on hold until the situation improves, while freeing itself from certain contractual obligations.
Mozambique LNG project is a major investment for Total
Mozambique has been facing violent insurgencies linked to Islamist extremist groups since 2017, but the conflict between military forces and rebel fighters has intensified this year, most recently with a deadly attack on the coastal town of Palma on 24 March in which dozens are reported to have been killed.
Palma is just kilometres away from a number of significant gas projects under development in the African country, including Total’s, where international companies are investing heavily to develop Mozambique’s potential as a major gas producer and LNG exporter.
ExxonMobil’s multi-billion dollar Rovuma project is among those also planned for the region.
Total said it “expresses solidarity” with the people and government of Mozambique, and hopes regional and international interventions in the situation will “enable the restoration of security and stability in Cabo Delgado province in a sustained manner”.
Development of its LNG project has been disrupted throughout the year amid outbreaks of conflict, but the force majeure is an indication that temporary work suspensions will now remain in place indefinitely.
It is a blow to the company, which has put an emphasis on gas and LNG development as it slowly transitions away from oil production as part of its long-term low-carbon shift.
Last year, Total signed a $14.9bn debt-financing agreement for the Mozambique venture, including for the development of two offshore natural gas fields – Golfinho and Atum – and construction of a two-train liquefaction plant with a total capacity of 13.1 million tonnes annually.
At the time of its acquisition of the stake in the project, Total said almost 90% of the production has already been sold through long-term contracts with key LNG buyers in Asia and in Europe.
