Italy's Saipem Sees Progress Towards Resuming Mozambique LNG Pproject

Francesca Landini
Thursday, July 27, 2023

Italian energy services group Saipem on Thursday said efforts to restart a multi-billion-euro LNG project in Mozambique for TotalEnergies were underway but refrained from giving a precise timeline.

The project, which would be the first onshore development of a LNG plant in the African country, was frozen in 2021 due to security problems and human rights concerns in the Cabo Delgato Province, where it will be located. 

In a post-results conference call Saipem Chief Executive Alessandro Puliti said he visited last week the site where the large liquefied natural gas (LNG) plant would be set up.

"I spent a day in Afungi ... the relocation activity is almost completed and all the social sustainability (work) that the Mozambique joint venture is doing is very impressive," Puliti said, referring to the transfer of a village away from the site where the plant will be constructed.

TotalEnergies is the sole operator of the project with a 26.5% stake. Other shareholders are Mozambique's ENH, Japan's Mitsui & Co., Thailand's PTTEP, and Indian firms ONGC Videsh, Bharat Petroleum and Oil India Ltd.

Puliti said his company was working with the project's shareholders to agree on additional costs for the restart of the project, which has a value of around 3.5 billion euros ($3.9 billion) for the group.

"I can't give a figure but we are talking about relevant additional costs on which we are currently negotiating with subcontracts."

In February, TotalEnergies mandated Jean-Christophe Rufin, an expert in humanitarian action and human rights, to carry out an independent mission to assess the humanitarian situation in the province before taking a decision on the restart of operations.

As for its financial results, Saipem said it swung to a net profit of 40 million euros in the first half from a net loss of 130 million euros in the same period last year when it had to cope with cost overruns at some big offshore wind projects. 

The group, which counts Italian state-controlled energy company Eni ENI.MI and Italian state lender CDP among its key investors, said it had almost completed some troublesome offshore wind projects. Saipem confirmed its 2023 guidance.

($1 = 0.8980 euros)

(Reuters - Reporting by Francesca Landini, editing by Alvise Armellini and David Evans)

Categories: Energy LNG Industry News Activity Africa

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