CAPE TOWN (Reuters) -TotalEnergies has told Mozambique that the costs of its liquefied natural gas (LNG) project in the country have risen by $4.5 billion in the four years it was on hold, and it wants its production agreement extended by a decade, a letter from its chief executive showed.
The French oil major had confirmed on Saturday that together with its partners it had decided to lift force majeure on the project, which was halted in 2021 by an Islamist militant attack and was previously estimated to cost $20 billion.
But before construction can restart, Mozambique’s council of ministers needs to approve an updated budget and schedule.
“This revised budget’s approval shall cover the incremental costs incurred by the project due to the force majeure, which amount to $4.5 billion,” the letter from TotalEnergies CEO Patrick Pouyanne to Mozambique President Daniel Chapo showed.
EXPECTED FIRST PRODUCTION IN FIRST HALF OF 2029
The Southern African country’s oil and gas regulator is coming up with its own estimate of the project’s additional costs and has not said when that will be ready.
Pouyanne’s letter, dated October 24 and seen by Reuters, said the prolonged halt to the project’s development had pushed out the expected first LNG cargo to the first half of 2029, from an initial target of July 2024.
“To compensate partially (for) the economic impact of the extended force majeure … the concessionaire respectfully requires the government to grant an extension of the term of the Golfinho-Atum development and production period … by a duration of 10 years.”
WORK TO CONTINUE IN ‘CONTAINMENT MODE’
TotalEnergies declined to comment. A spokesperson for the Mozambique president did not immediately respond to a request for comment.
The LNG project is 40% complete, although insurgent attacks have shown little sign of abating despite Mozambique signing a new security pact with Rwanda, whose military has helped secure the area where the plant is being developed.
Exxon Mobil is developing a separate project nearby.
The remaining work will take place in “containment mode”, with workers only allowed in by air or sea, TotalEnergies told a September 29 investor day.
Mozambique LNG is owned by TotalEnergies (26.5%), Japan’s Mitsui (20%), ENH (15%), Bharat Petroleum (10%), Oil India (10%), ONGC Videsh (10%) and Thailand’s PTTEP (8.5%).
(Reporting by Wendell Roelf; Additional reporting by America Hernandez;Editing by Alexander Winning and David Holmes)
