TotalEnergies SE and its partners involved in a liquefied natural gas (LNG) project in Mozambique have agreed to contribute significant funds to the local economy, indicating a potential resumption of the long-delayed development.
In order to foster economic growth, the companies plan to establish a foundation worth $200 million, as announced by Total on Tuesday. The French firm, eager to recommence construction after a halt caused by an insurgency linked to Islamic State over two years ago, also highlighted an independent report that demonstrates improvements in the local humanitarian situation.
According to analysts at Jefferies, Total is now “one step closer to a restart of the Mozambique LNG project,” with the report on human rights affirming enhanced security conditions in the Cabo Delgado area and validating the project’s social impact.
Total, which owns a 26.5% stake in the Mozambique LNG venture, will create a dedicated foundation specifically for socioeconomic development in Cabo Delgado, according to the company’s statement. It also stated that arrangements for relocating local families and providing associated compensation will be reevaluated and expedited.
With a value of $20 billion, surpassing Mozambique’s entire gross domestic product, the LNG project has the potential to be transformative for the country. However, progress has been hindered by recurring militant attacks.
Following improvements in the security situation over the past year, the report recommends “reassessing the relationship between Mozambique LNG and the Mozambican Defense Forces,” as stated by Total. “Mozambique LNG has initiated discussions with Mozambican authorities to address this matter.”
In February, Total indicated that it would consider resuming construction based on the report’s findings. However, the focus now shifts to managing costs. Total stated last week that the partners’ expenditure should not increase following the two-year hiatus, which could be challenging considering the current global surge in inflation.