TotalEnergies SE and its partners in a liquefied natural gas project in Mozambique agreed to pump millions of dollars into the local economy, signaling that long-delayed development could soon restart.
The companies will create a $200 million foundation to foster economic growth, Total said on Tuesday. The French company, keen to resume construction after an Islamic State-linked insurgency forced a halt more than two years ago, also cited an independent report showing improvements in the local humanitarian situation.
Total is “one step closer to a Mozambique LNG restart,” Jefferies analysts said in a research note. “The human rights report confirms improvements in security conditions in the Cabo Delgado area while validating Mozambique’s LNG project in terms of its social impact.”
The Mozambique LNG company, 26.5% owned by Total, will establish a foundation dedicated to socio-economic development in Cabo Delgado, the company said in a statement. He also said that arrangements for the relocation of local families and associated compensation will be re-examined and payments will be accelerated.
The $20 billion LNG project, an amount that exceeds all of Mozambique’s gross domestic product, could be transformative for the country, but progress has been hampered by waves of militant attacks.
Following improvements in the security situation over the past year, the report “recommends reviewing the framework of relations between Mozambique LNG and the Mozambican Defense Forces”, Total said. “Mozambique LNG has initiated a dialogue with the Mozambican authorities to this end.”
Total said in February it would consider resuming construction based on the report’s findings, but the focus is now on costs. Partner spending must not increase after the two-year break, Total said last week, a potentially difficult question as global inflation has risen.
–With help from Matthew Hill.
