Maputo — The Mozambican government has decided to conduct an independent audit to assess the costs incurred during the "force majeure' period declared by the French oil and gas company, Total Energies, which heads the Mozambique LNG Project, located on the Afungi peninsula, in Palma district, in the northern province of Cabo Delgado.
The LNG project, which is budgeted at around 20 billion dollars, has been suspended since 2021, when Total Energies declared a state of "force majeure' following a major terrorist attack against Palma town.
However, in October, the company announced the lifting of "force majeure' and the resumption of the LNG project.
But resumption was far from immediate. TotalEnergies has submitted an invoice for 4.5 billion US dollars to cover costs supposedly incurred during the period of force majeure. It wants these costs added to the cost of the investment - which means that they will be deducted from future gas revenue produced in the Rovuma Basin, and hence from the State's fiscal revenues.
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The company also demanded a ten-year extension from the government to begin the development and production phase of the project.
On Tuesday, the Council of Ministers (Cabinet) announced that it has approved a resolution which requires an audit of the costs incurred by TotalEnergies. Only after the audit will an addendum to the Project Development Plan be approved, including any consensus reached over the costs incurred during the period of force majeure.
Speaking to reporters after the Tuesday meeting of the Council of Ministers, the government spokesperson and Minister of State Administration, Inocencio Impissa, said "The resolution establishes the need to evaluate all expenditures incurred during the Force Majeure period, with technical rigor and transparency, guaranteeing the protection of the public interest and contractual predictability, through an independent audit, which includes the right to reply, before the approval of the final report'.
The government's position, he said, establishes, in accordance with current regulations, the reinstatement of the suspension period due to "force majeure', guaranteeing the recalculation of the 30-year development period and preserving, under the terms of the law, the elements of the initial Development Plan.
In a letter addressed to President Daniel Chapo, in which it announced the lifting of the state of force majeure, the company made the "full relaunch of the project', conditional on approval by the Government of the revised cost of the project and the new calendar. "As a final step before fully relaunching the project, the Mozambique LNG Concessionaire looks forward to receiving the approval by the Government of Mozambique of the revised project cost and schedule, as submitted to the Ministry of Energy...)', the letter said.
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The Mozambique LNG Project began with the discovery of over 65 trillion cubic feet of natural gas in the Rovuma Basin, which led TotalEnergies and its partners to take a Final Investment Decision in 2019.
The project includes two gas liquefaction units to be built on the Afungi Peninsula, with an expansion capacity of up to 43 million tonnes of LNG per year.
