Cabo Delgado: Standard forecasts resumption of gas works in 2023

Standard Bank chief economist Faúsio Mussá forecasts that the retreat of armed violence will allow work on the gas liquefaction plant in Cabo Delgado, northern Mozambique, to restart in the first half of 2023.

"The improvement in security conditions may dictate the resumption of construction work on the TotalEnergies complex on the Afungi peninsula in the first half of next year", reads the analysis distributed today.

The works represent the largest investment in Africa, on the order of 20 billion euros, and were suspended in April 2021 after armed groups attacked the town of Palma, leaving a number of dead, among residents and foreign workers, that has never been disclosed.

"Our expectation is that the project will begin exporting gas from 2026, which means that between the end of this year and the first half of 2023 Total Energies should resume construction", he stressed.

A return to work was at one point expected this year, but the company announced that it wants to see security normalised in the region and postponed a new assessment to the end of 2022.

"In principle, it is likely that the Final Investment Decision" on another adjacent project, by Exxon, "will be taken within a maximum of 12 months after the resumption" by France's Total Energies, concluded Fáusio Mussá.

There are three projects to extract gas from the reserves of the Rovuma basin (which are among the largest in the world), through wells in the floor of the Indian Ocean, 40 kilometres off Cabo Delgado.

However, only the smallest project, offshore, is ready to start.

This is the Coral Sul project led by ENI, with an offshore liquefaction plant on a floating platform which, from the coming months, will load liquefied gas onto carriers, with the production sold for 20 years to the oil company BP.

The other two projects receive the gas onshore and can each produce four times as much liquefied natural gas (LNG), but they are stalled owing to insecurity: the TotalEnergies project was interrupted during construction, while ExxonMobil's has not even reached an investment decision yet.