TotalEnergies Force Majeure. CEO: Mozambique LNG restart is not a matter of costs

French energy giant TotalEnergies had “good” discussions with Mozambique LNG contractors and they agreed not to inflate the costs of the contracts, according to Patrick Pouyanne, CEO of TotalEnergies. The CEO will “soon” meet with the President of Mozambique to discuss security in the country and the restart of the giant project.

TotalEnergies declared force majeure on the Mozambique LNG project in April 2021 and withdrew all personnel from the site due to new attacks.

Mozambique LNG includes the development of offshore gas fields in Mozambique’s Area 1 and a 12.8 mtpa liquefaction plant at the Afungi complex.

Besides TotalEnergies, other partners in the project are Japan’s Mitsui, Mozambique’s ENH, Thailand’s PTT, and Indian firms ONGC, Bharat Petroleum, and Oil India.

The project’s EPC contractor is CCS JV, a venture between Saipem, McDermott, and Chiyoda.

Last year, Pouyanne said the company was “not in a hurry” to resume the project, pointing out that security, human rights, and maintaining costs are the main three elements to make the decision to return to the Afungi site in the province of Cabo Delgado.

Pouyanne said in September the last condition for the company and its partners to resume the project is that the “contractors stick to their EPC contracts and not inflate the costs, otherwise we can wait longer.”

In February, he said that TotalEnergies hopes to resume construction on its giant Mozambique LNG project by the middle of 2024, with TotalEnergies “remobilizing the contractors”.

Asked about whether Mozambique LNG should be delayed or perhaps reengineered a bit following some of the recent cost inflation during the company’s first quarter results call on Friday, Pouyanne said that the restart of the project is not a matter of cost.

“I know one of my colleagues wants to float that idea, but it’s not true. I mentioned that few months ago that we were discussing with contractors on Mozambique because they raised their costs,” he said.

“We had good discussion with them. So the good news that I can confirm today is that in fact, we are back to.. we are on the good contracts with all of them. We realigned all the contractors because their interest is that we can execute the project. The interest is not to force us to retender or redesign,” he said.

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