Mozambique Pushes for Total to Restart $20 Billion Project

(Bloomberg) -- Mozambique wants Total SE to quickly restart work on its $20 billion liquefied natural gas project, despite concerns that insecurity could lead to a prolonged delay, the nation’s energy minister said.

A three-year-old Islamist insurgency in the southeastern African nation’s Cabo Delgado province has intensified in recent months, with attacks occurring near Total’s concession area. The French company paused construction and began evacuating its staff this month.

Mozambique is weighing offers from several countries, including France, Portugal and the U.S., for help fighting the Islamic State-linked insurgents, whose attacks have left nearly 2,500 people dead and caused 570,000 to flee their homes. The government wants to stop any disruptions to the gas investments that it expects will transform one of the world’s poorest countries.

Gas production at the project Total is leading is planned to start in 2024.

“We are working with Total to resume activities,” Mineral Resources and Energy Minister Max Tonela said by phone Wednesday. “There is still no indication of a change to the schedule.”

Prolonged Delay

Without a publicly announced plan on how to end the insurgency, the resumption of work could be delayed by months, according to Eurasia Group.

“The company is unlikely to succeed in securing its own armed protection at the site as President Filipe Nyusi’s cabinet is likely to continue to insist on full control of all armed operations,” Eurasia said in a report Tuesday. “However, operations are likely to resume once the negotiations are concluded in February or March given the company’s commitment to the project.”

Last week, IHS Markit said the violence could delay production by at least a year. The likelihood of an effective government response in the next 12 months is low, and the insurgency will probably expand this year, IHS Markit analysts Eva Renon and Langelihle Malimela said in a note.

Total hasn’t commented publicly on a possible delay and it didn’t respond to a request for comment on Wednesday.

The Southern African Development Community indefinitely postponed a meeting scheduled next week on ending the insurgency, Portuguese news agency Lusa reported Wednesday. The summit won’t happen partly because of a surge in coronavirus cases in Mozambique, where it was to be held.

The Total-led consortium plans to profit from rising LNG demand as countries including China and India switch from burning coal. Mozambique expects to reap as much as $96 billion in revenue over 25 years from the project and separate investments by ExxonMobil Corp. and Eni SpA.

(Adds comment from IHS Markit in third paragraph below ‘Prolonged Delay’ sub-headline)