Total suspends gas project in Mozambique

French energy giant Total SE suspended its $20 billion liquefied natural gas project in Mozambique indefinitely due to an escalation of violence in the area, including a March attack by Islamic State-linked militants.

The decision is a blow to Total, which bought an operating stake in the project for $3.9 billion in 2019, hoping to start exporting the super-chilled fuel by the end of 2024. The first phase of the project is designed to produce over 13 million tons of LNG a year.

Total was resuming work on the project last month, after it was stalled since January because of security threats, as more than 100 rebels raided the town of Palma nearby the site. Dozens of people died, millions of dollars of property was damaged and the company immediately froze plans to resume the project.

The worsening security situation is also a major setback for Mozambique, which is facing a rising death toll with hundreds of thousands of people displaced. Exports of the fuel could help transform the economy of one of the world’s poorest nations.

The fresh violence in the north of the Cabo Delgado province “leads Total, as operator of Mozambique LNG project, to declare force majeure,” the company said in a statement on Monday. That’s “the only way to best protect the project interest, until work can resume.” Project finance remains in effect and “Mozambique LNG has agreed with lenders to temporarily pause the debt drawdown,” Total said.

Bloomberg/Hauwa Abu