Wednesday, August 10, 2022

Palma attack: Total suspends work on Mozambique LNG project, declares force majeure

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  • The Afungi site of the Mozambique LNG project is only 10 km away from the area which was attacked by militants linked to the Islamic State in Palma

  • Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site, said an official statement

New Delhi: French energy major Total SA has suspended work on the massive US $20 billion Liquefied Natural Gas (LNG) project in Mozambique and has declared force majeure weeks after a nearby town was attacked by militants linked to the Islamic State (IS). In an official statement released on April 27, Total said, “Considering the evolution of the security situation in the north of the Cabo Delgado province in Mozambique, Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site. This situation leads Total, as operator of Mozambique LNG project, to declare force majeure.” The French energy major has offered no comment so far on whether the project will be resumed in the future.

In a regulatory filing to the stock exchanges on Tuesday, state-run Bharat Petroleum Corporation Ltd (BPCL) shared the information with the bourses. BPRL Ventures Mozambique BV, an overseas subsidiary of Bharat Petro Resources Ltd (BPRL), which is wholly owned subsidiary of BPCL, holds 10 percent participating interest in the Area 1 concession of Mozambique LNG Project.

Palma attack casts clouds over Total’s largest foreign investment in Africa

The Afungi site of the Mozambique LNG project is only 10 km away from the site of attack in Palma. On March 24, dozens of civilians were killed and around 11,000 were displaced after Islamic State militants attacked Palma. Gas-rich Cabo Delgado in Mozambique has seen a rise in jihadist insurgency since 2017. Around 2,600 people have been killed in the violence and close to 7,00,000 have been displaced, raising doubts over the viability of Africa’s biggest investment and Total’s largest investment in the continent.

Why Mozambique LNG Project is strategic for India?

The project involves designing, building and operating an integrated LNG plant, including offshore extraction, underwater pipeline, onshore processing plant, as well as ancillary support facilities. The Mozambique LNG project will supply gas for LNG exports (mainly to Europe and Asia) and domestic consumption. The site is also strategically located between Europe and Asia and for India, it will bring down the one-way ship journey to Northern India from 17 days trip (to Japan, the world’s largest LNG import market) to seven days. 

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The project is operated by Total E&P Mozambique Area 1 Limitada, a wholly owned subsidiary of Total SE, with 26.5 percent working interest. Co-venturers include ENH Rovuma Area Um, SA (15 percent), Mitsui E&P Mozambique Areal Limited (20 percent), ONGC Videsh Rovuma Limited (10 percent), Beas Rovuma Energy Mozambique Limited (10 percent), BPRL Ventures Mozambique BV (10 percent), and PTTEP Mozambique Area 1 Limited (8.5 percent).

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