Troops Head to Mozambique LNG Site as Total’s Force Majeure Underscores Terrorist Threat
The South African Development Community has agreed to send up to 3,000 troops to contain Mozambique’s terrorist insurgency after Total declared force majeure and evacuated all personnel from its Mozambique LNG worksite.
The South African Development Community (SADC) will deploy military special forces to quell terrorist incursions that caused Total to declare force majeure on 26 April and remove all personnel from its $20-billion Mozambique Liquefied Natural Gas (LNG) project site on East Africa’s Afungi peninsula.
The SADC made the decision at a meeting held 28 and 29 April in Mozambique’s capital of Maputo after representatives of Angola, Botswana, South Africa, Malawi, Tanzania, and Zimbabwe recommended deploying a regional African force of up to 3,000 elite troops to control the insurgents who, since March, have moved ever closer to Total’s Mozambique LNG construction site.
In an interview with JPT the day after the Maputo meetings, NJ Ayuk, executive chairman of the African Energy Chamber, said he believes the coordinated action by SADC nations will soon restore peace along the Cabo Delgado coast and that Total will be back to work in “less than 12 months.”
“The project’s not dead; the project is alive,” Ayuk said. “I’m very encouraged by the actions taken by president (Filipe) Nyusi (of Mozambique) and his team and also the strong focus that has been shown by Total. Not in my many years in this industry have I seen government and industry have such fruitful conversations to resolve a crisis.”
Total, Ayuk said, has invested “billions of dollars already” and service companies as well. “Whether it’s Saipam, Technip, Slumberger or others, they have invested in personnel, built the capacity of Mozambicans, and set up bases, infrastructure and fabrication yards. South African employees, some of them highly skilled, have moved into the area. ... Redeployment of these highly skilled people would be a setback for the future.”
Total and the Mozambique government have discussed how to keep “key essential personnel in place so that some work can still be carried on,” Ayuk said. “I think (Total’s action) is what you might call a “soft force majeure.”
One of the poorest nations, Mozambique has endured an Islamic militant insurgency for more than 3 years, but attacks intensified in late 2020 along the Cabo Delgado coast where not only Total’s project is located but also ExxonMobil’s $30-billion Rovuma LNG project on which a final investment decision (FID) has been delayed to 2022 or even 2023, according to financial media reports.
Ayuk said that, while he thinks the current situation “is affecting Exxon, … Exxon is going to declare FID at the appropriate time” because “what we are doing now between the government and Total to fix the security situation is going to help Exxon as well.”
With more than 30 million mt/year of LNG production capacity under development among the separate Total and ExxonMobil projects, Mozambique was moving toward becoming one of the world’s biggest LNG exporters while it also delivers energy to a domestic population that lives for the most part without electricity.
Total had planned to produce its first LNG in 2024. On 26 April, however, the following appeared on the French major’s website:
“Considering the evolution of the security situation in the north of the Cabo Delgado province in Mozambique, Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site. This situation leads Total, as operator of Mozambique LNG project, to declare force majeure.
“Total expresses its solidarity with the government and people of Mozambique and wishes that the actions carried out by the government of Mozambique and its regional and international partners will enable the restoration of security and stability in Cabo Delgado province in a sustained manner.”
In response, the chairman of Mozambique’s National Petroleum Institute, Carlos Zacarias, said that Total will resume work at Mozambique LNG when the security situation is guaranteed and that Mozambican authorities were working to restore “normal security conditions,” Reuters reported, noting further that Zacarias made clear at a news conference that Total had not abandoned the project.
Two days later, the SADC met not only to agree to send ground troops but also to commit air and naval assets to support the Mozambican military, according to a leaked copy of a report of tactical options obtained by the independent Mozambique news source Zitamar and available for download on its site.
The report stated that a regional commitment of troops would help with logistics and intelligence as well as enable the retaking of the strategic port of Mocimboa da Praia, which fell to insurgents in August. Botswana brigadier Michael Mukokomani, chief of staff of the SADC Standby Force, which would form part of the total of almost 3,000 military personal deployed, signed the report.
Zitamar news also reported this week that Lloyds had put Mozambique’s northern Cabo Delgado coast on its high-risk list, a move guaranteed to raise insurance rates.
Total’s march to a declaration of force majeure began in late 2020 when the French major temporarily halted work as terrorist attacks escalated in the country.
On 24 March, Total signaled it would resume work while, on the same day, the Mozambique government designated a 25-km perimeter surrounding the Mozambique LNG project on the Afungi peninsula as a special security area.
Insurgents responded almost immediately, however, attacking the town of Palma within that 25-km perimeter. This forced Total to suspend its plan to resume construction; cut staff to a minimum; and, after reviewing legal options, declare force majeure a month later to control financial losses by reducing some of its contractual obligations.
As reported by S&P Global, Total’s Mozambique LNG already has secured long-term off-take agreements amounting to more than 11 million mt/year with 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.
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, S&P wrote.
Total operates Mozambique LNG with a 26.5% stake, after it took 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.
Total E&P Mozambique Area 1, a wholly owned subsidiary of Total SE, operates Mozambique LNG with a 26.5% participating interest alongside ENH Rovuma Área Um (15%), Mitsui E&P Mozambique Area1 (20%), ONGC Videsh Rovuma (10%), Beas Rovuma Energy Mozambique (10%), BPRL Ventures Mozambique (10%), and PTTEP Mozambique Area 1 (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.