Communication - Presse
Gas outlook brighter, TotalEnergies to resume in 2024
Consulting firm BMI said on Wednesday that the outlook for natural gas projects in Mozambique is improving, despite the delay in the resumption of work in Cabo Delgado by France’s TotalEnergies.
“The outlook for megaprojects in Mozambique is improving, with progress being made on the resumption of projects,” BMI analysts wrote in a note on the natural gas sector in this African country.
“TotalEnergies has taken several steps to restart the project, following the violence in 2021, which forced the company to declare ‘force majeure’ and suspend construction activities” of the plant that will liquefy the gas, allowing it to be exported.
In the analysis sent to investors and to which Lusa has had access, the analysts from this consultancy, owned by the same people as the financial rating agency Fitch Ratings, said that TotalEnergies should restart work in the first half of next year after renegotiating contracts with local contractors.
“The final consideration for relaunching the project is to renegotiate costs with local contractors,” they write, pointing out that “since the project was suspended, there have been several large price rises for raw materials, energy and labour,” as well as a general increase in inflation, “which will decrease the project’s profit margins.”
Despite the increase, the CEO of TotalEnergies, Patrick Pouyanne, “confirmed that none of the old gas buyers had exercised their right to leave the project and indicated that there continues to be strong demand even if they leave”.
Mozambique has three development projects approved to exploit the natural gas reserves in the Rovuma basin, classified among the largest in the world, off the coast of Cabo Delgado.
Two of these projects are larger and involve channelling the gas from the seabed to land, cooling it in a plant to export it by sea in a liquid state. One is led by TotalEnergies (Area 1 consortium), and work progressed until it was suspended indefinitely after an armed attack on Palma in March 2021, when the French energy company declared that it would only resume work when the area was safe.
The other is the still unannounced investment led by ExxonMobil and Eni (Area 4 consortium).
A third completed and smaller project, the Coral FLNG project, also belongs to the Area 4 consortium and consists of a floating platform for capturing and processing gas for export directly at sea, which started up in November 2022.
“For 2023, we anticipate that gas production in Mozambique will rise 47% to 9.27 bcm [billion cubic metres], up from 6.31 bcm in 2022,” the analysts estimate, stressing that the outlook is for gas production to reach 44.1 bcm in 2032, which has the potential to transform the Mozambican economy not only due to local development but also due to the strong flow of state revenue from these projects.
