Mozambique and TotalEnergies formally restarted the French energy major's $20 billion liquefied natural gas project in the country at a ceremony on Thursday, nearly five years after it was put on hold following a deadly attack by Islamist militants.
Construction was halted in 2021. But TotalEnergies, which has taken extra equity with its partners after some backers pulled out, said late last year it was ready to resume work at the site in the northern province of Cabo Delgado.
"You will see a massive ramp-up in activity in coming months ... a first offshore vessel has already been mobilized to begin installing the offshore infrastructure," TotalEnergies CEO Patrick Pouyanne said in Afungi, near the project site, on Thursday.
The company added it would provide 200 million meticals ($3.2 million) to help Mozambique deal with the effects of recent flooding.
"Within the next 12 to 18 months, we will return to this place to witness the start of construction on Rovuma LNG," said Mozambican President Daniel Chapo, referring to the Exxon-led project that shares some facilities with Total's.
Taxes, Profits to Boost Government Coffers
Total has already trained about 4,500 workers to be employed on the project, Pouyanne said, with 1,500 young workers being trained in Palma, near the project site, in carpentry, electricity and other trades needed to build the plant.
Chapo said the relaunch represented "a decisive step in the strategy of Mozambique to develop its resources, grow its economy, create jobs ... and establish Mozambique as a decisive player in natural gas".
He added that the project could generate as much as $35 billion for government coffers over its lifetime from taxes, oil profits, and other contributions.
Security Has Improved, But Costs Have Risen
Security has improved in Cabo Delgado, particularly with the special deployment of Rwandan soldiers around the Afungi construction site. The Islamist insurgency, though weakened, continues to simmer, however.
With capacity to produce 13 million metric tons of LNG annually, the project is expected to make Mozambique a major gas exporter, transforming the poor African nation's economy when it begins producing in 2029. But it has been dogged by security, finance and human rights issues that have spooked some investors.
In October, TotalEnergies wrote to Chapo estimating that the project's costs had risen by $4.5 billion in the years it had been on hold. It said the consortium wanted the development and production period extended by 10 years as partial compensation.
It is unclear whether these extra cost issues have been resolved after Chapo said Mozambique had "counter-arguments" to this amount.
"Let's keep the budget under control, as we know the government is very attentive to this," Pouyanne said at the ceremony on Thursday.
Total will still aim to target first gas production by 2029, despite the delays, Pouyanne added.
TotalEnergies has a 26.5% stake in the Mozambique LNG consortium. Japan's Mitsui owns 20%, with ENH at 15%, and Bharat Petroleum, Oil India, and ONGC Videsh all at 10%. Thailand's PTTEP holds the remaining 8.5% stake.
($1 = 63.2500 meticais)
(Reuters- Reporting by Custodio Cossa and Wendell Roelf;Additional reporting Sfundo Parakozov in Johannesburg and America Hernandez in Paris; Editing by Alexander Winning, Joe Bavier and Emelia Sithole-Matarise)