TotalEnergies still in talks with Mozambique LNG contractors

French energy giant TotalEnergies and its partners in the $20 billion Mozambique LNG project are still in talks with the contractors regarding the cost terms of their contracts as they work to restart the project.

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

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

Earlier this year, Patrick Pouyanne, CEO of TotalEnergies, 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.

The CEO entrusted Jean-Christophe Rufin, an expert in humanitarian action and human rights, with an independent mission to assess the humanitarian situation in the province.

In May, TotalEnergies released the report regarding the humanitarian situation, but it did not provide a restart date for the project.

Second half of the year

Pouyanne told analysts last week during the company’s second-quarter results call that the company and its partners “are working on both parts” to restart the project.

“One is with the contractors, and I expect that to be done in the second half of this year. So we’ll have the answers and I hope it will be positive from them,” he said.

The CEO previously said that some of the Mozambique LNG contractors need to be “reasonable” regarding the cost terms of their contracts.

“And then we are working on the relaunching, unfreezing the financing. So I think the objective for us is to come to you before year-end, and we should have a clarity on the way forward,” Pouyanne said.

“But again, no hurry, costs before and then let’s do it step by step properly, it’s the objective we have but if we need to wait some more, we’ll wait,” he said.

“Progressing in the right direction”

Saipem’s CEO Alessandro Puliti said in February this year that the Italian contractor was expecting to restart work on the TotalEnergies-led Mozambique LNG project in July this year.

The company’s share for the onshore contracts is worth 3.5 billion euros ($3.86 billion).

Puliti said during Saipem’s H1 earnings call on July 27 that he visited the Afungi site during the week before.

He said that the “relocation activity is almost completed” and all the social sustainability activity work that the Mozambique LNG JV is doing is “really impressive”.

Saipem’s CEO said the company was working with the Mozambique LNG JV for “coming to the right price” for the restart of the project.

“This means that we have already had a very intensive round of renegotiation with our subcontractors. And there is some tendering activities, again, with subcontractors that is going on, and we expect to have results by the end of the summer of this new tendering activity,” he said.

“So, all in all, we can say that it is work in progress in Mozambique and progressing in the right direction,” Puliti said.

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.

Almost 90 production of the Mozambique LNG project is sold through long-term contracts with key LNG buyers in Asia and in Europe, TotalEnergies previously said.

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