TotalEnergies' Mozambique LNG project faces delay beyond 2029

TotalEnergies' $20bn (R370.45bn) Mozambique liquefied natural gas (LNG) project will not be operational by 2029 as hoped, the French oil major said on Wednesday, citing the need to end force majeure and ensure security at the project site.

TotalEnergies had previously said that it hoped to lift force majeure and restart construction on the long-delayed LNG project by the end of 2024, which would allow it to come online by 2029.

However, a $4.7bn (R87.06bn) loan from the US Export-Import Bank (EXIM) has yet to be re-approved, after construction on the project was frozen in 2021 due to violent unrest in the northern Cabo Delgado region near the project site — before any disbursements were made.

Total CEO Patrick Pouyanne told investors in October that force majeure could only be lifted with the project finance fully secured, and that three export agencies had not yet reconfirmed their loans after Total negotiated new restart costs with contractors.

"The priority is to restore peace and security in Cabo Delgado and the lifting of force majeure," a Total spokesperson said on Wednesday following a report by the Financial Times on the slipped timeline.

EXIM told Reuters in November it was still re-evaluating the amended loan package, along with several other export credit agencies it declined to name.

WAITING FOR EXIM

EXIM initially agreed to finance Mozambique LNG under President Donald Trump's first term. But requests to amend the loan to reboot the stalled project languished under President Joe Biden's administration, which largely restricted lending for overseas oil and gas projects.

Since taking office on Monday, Trump has made three senior appointments to EXIM, though a full leadership transition is expected to take weeks.

Mozambique LNG, in which TotalEnergies holds a 26.5% operating stake, was slated to make the southern African nation a major LNG producer but the project ground to a halt when an insurgency led by Islamic State-linked militants swept the region.

Security there has since improved, with partner company Mitsui saying in December that final preparations were underway to resume construction after renegotiation with contractors.

Mozambican President Daniel Chapo, who took office last week, has promised to continue deploying soldiers to secure the project site. However, he is also dealing with months of protests against his disputed election victory, with over 300 people killed in clashes with security forces since October 9 vote.