The Indonesian state oil company Pertamina has cancelled its 20-year contract to purchase liquid natural gas (LNG) from Mozambique LNG, a TotalEnergies led project, suspended since 2021 due to the terrorist attacks in Cabo Delgado.
According to the Argus website, which specialises in energy matters, an agreement signed in 2019 provided for the export to Indonesia of one million mtpa (million tons per year) of natural gas over 20 years.
“There is no [penalty], because there is force majeure, so it is an agreement between both parties,” a Pertamina spokesperson says, cited by the same portal.
The natural gas terminal that TotalEnergies started to build in Cabo Delgado, northern Mozambique, considered one of the largest investments of its kind in Africa, is budgeted at more than US$20 billion, but work has been stalled since 2021 following terrorist attacks in the province.
The same source recalls that, “since the offtake agreements were signed, no other firm has said publicly that it has cancelled”.
French oil company TotalEnergies plans to restart construction work on a liquefied natural gas plant later this year, the company’s president announced in September at a conference with analysts, considering that “the situation has clearly improved”.
Patrick Pouyanne said that he considered that the situation of insecurity that led to the suspension of work in 2021 “has clearly improved”, allowing work to resume in the province of Cabo Delgado later this year.
Mozambique LNG’s commercial operation is scheduled to begin in 2028.
Mozambique has three natural gas development projects approved in the Rovuma basin off the coast of Cabo Delgado, ranked among the largest reserves in the world.
The two larger projects plan to channel gas from the seabed to land, cooling it to a liquid state before exporting it by sea.
One is led by TotalEnergies (Area 1 consortium), and the works progressed until it was suspended for an indefinite period 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 investment, led by ExxonMobil and Eni (Area 4 consortium), is yet to be announced.
A third completed, smaller project, also run by the Area 4 consortium, consists of a floating platform for capturing and processing gas for export directly at sea, which started operations in November, 2022.
The floating platform is expected to produce 3.4 mtpa of liquefied natural gas, Area 1 aims for 13.12 mtpa and the onshore plan for Area 4 foresees 15 mtpa.
The province of Cabo Delgado has been facing an armed insurgency for six years with some attacks claimed by the extremist group Islamic State, which has led to a military response since July 2021, with support from Rwanda and the Southern African Development Community (SADC), freeing districts near gas projects.
The conflict has already displaced one million people, according to the United Nations High Commissioner for Refugees (UNHCR), and around 4,000 deaths, according to the ACLED conflict registration project.
