London — France's Total has suspended its plan to resume construction work at the site of its Mozambique LNG project after attacks on the nearby town of Palma in the north of the country, a company spokeswoman said March 29.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Dozens of people were reportedly killed in the attacks by Islamist militants during the offensive against Palma that began late last week close to the site of the LNG project on the Afungi peninsula.
Total on March 24 had signaled a restart of work at Mozambique LNG -- designed to have a capacity of 13.1 million mt/year -- after security was beefed up following an escalation of the Islamist insurgency in the country at the end of 2020.
However, the attacks in Palma began at almost the same time as Total issued its statement on March 24.
"The remobilization of the project [...] is of course now suspended," the Total spokeswoman said March 29.
"Total has decided to reduce to a strict minimum level the workforce on the Afungi site," she said, adding that Total's "absolute priority" was to ensure the safety and security of the people who work on the project.
She confirmed that there were no victims among the staff employed on the site of the project in Afungi.
The plan announced March 24 to resume work came after the government of Mozambique declared the area within a 25 km perimeter surrounding the Mozambique LNG project as a special security area.
Almost immediately, however, the offensive against Palma -- which is said to be within the 25 km perimeter -- began.
However, Alexander Raymakers from risk intelligence firm Verisk Maplecroft said the attack on Palma was "highly unlikely" to have been driven by Total's announcement that it would resume construction operations at the LNG project.
"The scale and intensity of the attack on Palma required meticulous planning, suggesting that the group used a lull in the fighting during rainy season in the first three months of 2021 to prepare a concentrated high profile attack," Raymakers said.
However, he said, the latest attack on Palma was a "major setback" for Maputo. "It raises serious questions about its ability to guarantee the security of LNG projects vital to the country's long-term financial stability," he said.
Mozambique's more than three-year-old insurgency saw militants close in on the site of the project on the Afungi peninsula -- also home to ExxonMobil 's planned 15.2 million mt/year Rovuma LNG project -- at the end of 2020.
It highlights the continued security issues facing the southeast African country and its fledgling LNG industry.
More than 30 million mt/year of LNG production capacity is under development in Mozambique as the country looks to join the ranks of the world's biggest LNG exporters.
Total's Mozambique LNG has already secured long-term offtake agreements amounting to more than 11 million mt/year with the likes of Shell, France's EDF, China's CNOOC, a partnership of the UK's Centrica and Japan's Tokyo Gas, and a joint venture between Japan's JERA and Taiwan's CPC Corp.
Total said last week the timetable for first LNG from the project had been unaffected by the disruption, with first cargoes still expected in 2024.
However, according to S&P Global Platts Analytics' managing LNG analyst, Samer Mosis, the latest violence close to the site of the project means likely delays in first LNG.
"Even though Total's Mozambique LNG is largely de-risked from a offtake perspective, the risk of delay due to violence and civil unrest has underpinned Platts Analytics long-held view that the project would not reach in-service before 2025 at the earliest," Mosis said March 29.
"These latest incidents are increasingly putting even this timeline at risk," he said.
Mosis added that without a solution to the escalating violence in the country, movement on ExxonMobil's neighboring Rovuma LNG project also remained unlikely.
The US major in April last year said it was delaying final investment decision on the 15.2 million mt/year Rovuma LNG project as part of a 30% reduction in spending.
ExxonMobil had already pushed back FID on the project into 2020, having been expected to approve it by end-2019.
In February, Total CEO Patrick Pouyanne said the Mozambique LNG project, whose capacity previously was pegged at 12.9 million mt/year, was 21% complete as of the end of 2020.
Total operates Mozambique LNG with a 26.5% stake having taken over the project in September 2019 as part of its deal with Occidental to buy assets the US company acquired with its purchase of Anadarko.
Its partners are ENH (15%), Mitsui (20%), ONGC Videsh (10%), Beas Rovuma Energy (10%), BPRL (10%), and PTTEP (8.5%).
The initial two-train project could be expanded, with a potential capacity of as much as 43 million mt/year, according to the project's website.
Militants have stepped up attacks in the Palma district between the Afungi peninsula and the militant-controlled port of Mocimboa da Praia in recent months.
The port was occupied in mid-August as part of the growing Islamist insurgency that began in October 2017.
A number of groups are now part of the insurgency -- which also spread to offshore tourist islands in the autumn -- including the Ahlu Sunnah Wa-Jamo (ASWJ) group and the Islamic State's Central Africa Province (ISCAP), which has declared Mocimboa da Praia as the capital of its province.