The analyst at consultancy Rystad Energy, Pranav Joshi, said this Monday (10) that oil company TotalEnergies should only return to Mozambique in 2024, delaying the start of Liquefied Natural Gas (LNG) production to 2028. According to the analyst, TotalEnergies is expected to face increased costs on returning to Cabo Delgado, due to the need to renegotiate contracts and because of the significant rise in inflation in the world, mainly in Mozambique.

“Things can get complicated as contracts may need to be renegotiated and new agreements may include the impact of inflation, which could delay the lifting of ‘force majeure’. Thus, we estimate that the project will only start production in 2028”, said Pranav Joshi, in an interview with Lusa. “TotalEnergies appears to be working behind the scenes to ensure a smooth lifting of ‘force majeure’. The oil company was aiming for the end of the year, having recently published a report signed by the human rights expert, Jean-Christophe Rufin, which presented many recommendations, including the constitution of a multiannual socioeconomic budget of 200 million dollars”, stressed the analyst at Rystad Energy.

However, with regard to a possible 25% increase in costs for the operation of TotalEnergies in Mozambique, the head of the Department of Energy at Rystad Energy, Audun Martinsen, stressed that this rise in prices is applicable not only in the country, as well as in the rest of the continent. “Globally, LNG costs have increased by 25%. However, based on the scope and execution model, the value varies from project to project, between 15% and 30%. If TotalEnergies has not changed the concept, they will be exposed to the same level of rising costs of inflation as the others”, explained Audun Martinsen.

Mozambique currently has three development projects approved for the exploitation of the LNG reserves in the Rovuma basin, ranked among the largest in the world, off the coast of Cabo Delgado. Two of these projects are larger and foresee channeling the gas directly from the seabed to land, cooling it in a factory to export it by sea in a liquid state. One is led by TotalEnergies (Area 1 consortium) and works advanced until they were suspended indefinitely, after an armed attack on Palma in March 2021, when the French energy company declared that it would only resume work when the area was safe. The other is the still unannounced investment led by ExxonMobil and Eni (Area 4 consortium).

A third completed and smaller project also belongs to the Area 4 consortium and consists of a floating platform for capturing and processing gas for export, directly at sea, which started in November 2022. The province of Cabo Delgado has been affected by a conflict since 2017 that has terrorized the population. Armed rebel groups have pillaged and massacred villages and towns across the province and a variety of attacks have been claimed by the ‘arm’ of the self-proclaimed Islamic State in that region. The conflict has already caused more than 4,000 deaths (data from The Armed Conflict Location & Event Data Project) and at least one million people displaced, according to a balance made by the Mozambican authorities.