The process is not yet fully concluded. We will have to work with the other party to understand the basis of these proposals and, based on that, make the final decision as the Government,” stated the head of state to journalists, concluding a five-day visit to the United States.
The matter concerns the conditions imposed by TotalEnergies in a letter delivered to the Mozambican presidency on October 24. The letter communicated the decision to lift the ‘force majeure’ clause of the project, four years after its suspension due to terrorist attacks in Cabo Delgado, while also pointing out compensation for the halt’s damages.
Daniel Chapo initially recalled that the letter, signed by the president of the oil company, Patrick Pouyanné, was delivered when the head of state was out of the country, amidst visits to Zambia and the USA.
“Now that we are returning, we will acquaint ourselves with the letter’s content that was received,” Chapo said, adding that there are “conditions mainly related to the extension of the concession period.”
“We will need to sit down, understand in detail the basis for this extension, and based on these fundamentals, there might also be counter arguments from the Government’s side. Ultimately, consensus can be reached on whether there will be an extension, or if there will be an extension, whether it will be within the proposed period,” he indicated.
The extension of the concession proposed by TotalEnergies, leading the consortium of Area 1 of the Rovuma Basin in northern Mozambique, is intended, according to the letter accessed by Lusa, to compensate for losses of $4.5 billion (approximately €3.87 billion) over four years of the mega-project’s suspension.
“We will also conduct the same exercise. First, understand the basis for the mentioned amount and then, without a doubt, there will be counter arguments from our side, to eventually reach a consensus on whether to proceed with that amount or not, or determine an amount that makes sense for both parties,” stated the head of state, emphasizing that it is “all a matter of dialogue between the parties.”
The letter signed by the president of TotalEnergies, detailing the decision to lift the ‘force majeure’ clause, justifies the request to “partially compensate for the economic impact” of the cessation, due to terrorist attacks in Cabo Delgado, acknowledging that safety conditions for resumption are now met.
“The concessionaire respectfully requests the Government to grant an extension of the Development and Production Period of the [Golfinho-Atum field] (…) for a duration of 10 years,” it reads.
It adds that “as the final step before the project’s full launch,” the concessionaire Mozambique LNG, led by TotalEnergies, “awaits Mozambique government’s approval for the revised cost and schedule.”
“Approval of this revised budget will cover incremental costs incurred by the project due to ‘force majeure’ events, totaling $4.5 billion,” it further states.
The situation involves a $20 billion (€17 billion) mega-project. The concessionaire now indicates that the first delivery of Liquefied Natural Gas (LNG) from the first line to be installed in Afungi, Cabo Delgado, has been shifted from July 2024, as previously planned, to the “first half of 2029.”
