Government will take final decision on extending LNG concession – aimnews.org

Maputo, 1 Nov (AIM) – Mozambican President Daniel Chapo on Friday warned that the final decision on the new proposals by the French oil and gas company TotalEnergies for the exploitation of the natural gas reserves in the Rovuma Basin, off the coast of the northern province of Cabo Delgado, must be taken by the government on the basis of consensus between the government and the company.

A week ago TotalEnergies lifted the state of force majeure which it had declared in 2021, halting all work on the liquefied natural gas (LNG) project which it heads. It imposed force majeure following a major attack by Islamist terrorists against the town of Palma in March 2021.

Since then, work by the Mozambican defence and security forces and their Rwandan allies has greatly improved security around the project site on the Afungi Peninsula. But TotalEnergies is now making other demands on the government, notably an extension of its natural gas concession in Area One of the Rovuma Basin for a further ten years.

“This process is not completely closed”, Chapo told reporters, at the end of his working visit to the United States. “We shall have to work with the company so that we can understand the basis for its proposals and we shall then take the final decision”.

He said the Mozambican authorities will meet with managers of TotalEnergies to discuss extending the concession and whether the proposal is reasonable.

“We will have to sit down and understand in detail the grounds for this extension”, said Chapo. “There may also be counter-arguments on the part of the government, and then a consensus may be reached on whether to extend the concession and for how long”.

The proposal to extend the concession came in a letter to Chapo signed by the TotalEnergies CEO, Patrick Pouyanne, which was delivered while the President was out of the country. It seems that the government has not yet discussed the contents of the letter.

“Now that we are returning, we shall look into the content of the letter”, said Chapo. He added that Mozambique will have to make its own assessment of the new conditions imposed by the long delays the project has suffered, due to the lack of security.

TotalEnergies also wants more money – the letter claimed that the proposed ten year extension is intended to compensate for the extra losses of 4,500 million dollars caused by the interruption to the work at Afungi.

Chapo said the government would have to understand the basis for TotalEnergies’ calculations. There would be discussions to reach a consensus.

The letter signed by Pouyanne said that the Mozambique-LNG consortium, headed by the French company, would await approval by the government of an amended budget and timetable. The new budget should include “the incremental costs incurred by the project due to the events of force majeure, which amount to 4,500 million dollars”.

Initially, Mozambique-LNG was budgeted at 20 billion dollars. But that budget was drawn up when it was assumed that the first LNG from Afungi would be produced by July 2024. The current forecast by TotalEnergies pushes the first LNG production to the first half of 2029. Production is estimated at 13 million tonnes of LNG a year.
(AIM)
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