IMF sees TotalEnergies restarting Mozambique LNG project in early 2024

18th January 2024 By: Bloomberg

IMF sees TotalEnergies restarting Mozambique LNG project in early 2024

Photo by: Bloomberg

A group led by TotalEnergies will likely resume work on a liquefied natural gas (LNG) project in Mozambique early this year, according to the International Monetary Fund, after a raid by Islamic State-linked militants led to a near-three-year freeze on the more-than $20 billion project.

Mozambique’s government in 2021 called for military help from the 16-member Southern African Development Community bloc, and separately from Rwanda. Since then, the troops have dislodged the insurgents from towns they held and killed senior leaders. Hundreds of thousands of people who’d fled the violence have returned.

“Security conditions in the north continue to improve and the large LNG project that was stopped in April 2021 is expected to restart in early 2024,” the IMF said in a report published late Tuesday.

The resumption of the project may be crucial in helping Mozambique avoid having to restructure a $900-million eurobond on which the government is in 2028 due to begin repayments. The IMF sees production starting in 2027, according to the report.

By TotalEnergies’ own forecasts, that could prove optimistic: The company said last year that production would start four years after the project’s resumption.

An even bigger LNG-export project that ExxonMobil plans next to TotalEnergies’ plant will start shipping in 2029, according to the Washington-based lender.

Still, violence is continuing in the northeastern Cabo Delgado province where the projects are situated. The Islamic State claimed a string of smaller attacks in late December and at the start of this year, mostly targeting civilians. More than 1,800 people fled their homes as a result, according to a January 12 statement from the United Nations Office for the Coordination of Humanitarian Affairs.

The IMF warned that social conditions remain fragile, even as security had improved.

“While food insecurity impacts about 10% of the population, humanitarian assistance programs (such as the World Food Programme) are struggling to get funding,” it said. “Maintaining peace and stability in the region depends vitally on humanitarian assistance.”