…African Energy Chamber demands reversal
…Millions of jobs, economic growth on the line
Ben Eguzozie, in Port Harcourt
Africa’s biggest foreign direct investment and one of the world’s biggest gas liquefaction project, the $24 billion Mozambique’s Area 1 LNG, appears threatened with project tie up, as the developer, Total Corporation of France, has announced force majeure on the project, following the security situation in the north of the Cabo Delgado province of the country.
But the African Energy Chamber, has emphasized the need for Total Corporation to reverse the declaration of force majeure on the $24 billion project, by far Africa’s biggest gas liquefaction project.
The Mozambique’s Area1 LNG, with 12.9 metric tonnes per annum (MTPA) capacity, is an integrated LNG development that will initially comprise two LNG liquefaction trains – each capable of processing 6.44 million metric tonnes a year. The initial development is expected to produce 16 trillion cubic feet (tcf) of gas and 93 million barrels of condensate over the 30-year development and production period of the project.
The integrated plant is among world’s biggest LNG projects. It also tops among world’s incoming total 845 MTPA LNG liquefaction projects.
While committing $400 million in guarantees and direct lending to the Area1 LNG project in August 2020, African Export-Import Bank’s (Afreximbank) president Benedict Oramah said: “We are confident the Mozambique LNG project will create opportunities for the country and drive economic growth. We believe that projects such as this will create a precedent through which other development projects in Africa can secure funding and gain international traction. We are delighted to be one of the key stakeholders to be involved in this project which will accelerate growth rate of intra-African trade.”
French multinational oil company Total Corporation had considered the legal angle due to the development of the tough security situation in the north of the Cabo Delgado province of Mozambique.
Its force majeure declaration on the LNG project puts a clinker in the development of what was aimed as perhaps the world’s single biggest integrated gas liquefaction project.
NJ Ayuk, Executive Chairman of the African Energy Chamber, said he was disappointed over the action of the multinational oil company.
He said Mozambique may have some important security issues at the moment, but it is not within the top countries most impacted by terrorism like Nigeria, Pakistan, India, and Libya, where Total continues to operate.
“It was important for Total to take the same stance in Mozambique as it has done in these countries more impacted by terrorism, and together with the government and other parties involved, find a solution to safely continue with its LNG Project,” Ayuk said.
Apparently doubting the French multinational oil company’s sincerity in the Mozambique’s LNG force majeure declaration, Ayuk recalled that, when energy multinationals made a decision to halt natural gas development projects in Myanmar, and some declared Force Majeure, Total remained, and made a clear argument that the public stands to lose from electricity shortages. The field supplied about half of Myanmar’s natural gas used for power generation.
According the African Energy Chamber boss, Mozambique continues to be one of the most attractive options to produce gas in the world, due to its carbon neutrality, representing a viable solution for climate change, which is a rare opportunity for Africa and the world.
“The energy industry continues to grapple with multiple insecurity issues, community engagement, climate change, energy poverty; greater cooperation between stakeholders is required to find beneficial solutions,” Ayuk said.
“When we stop as an industry, we nurture the hate speech against energy projects in Africa, and we give those “haters” instruments to criticize further our good-faith efforts to make Africa better for Africans. This is not the time to allow for this. This is the time to make a stand, find solutions, and continue exploiting our resources.
“Everyone must stand against the cowardly attack on Palma. Everyone with sense must understand that terrorist activities and the attacks on energy infrastructure are not only against Total and energy investors, they are against Mozambique and the entire world and all who believe that Mozambique’s gas is a solution to the climate crisis,” he argued.
Ayuk said, “not only is this LNG project and revenue for a company and its lenders is at stake, but the life of everyday Africans and of the people of Mozambique are. We must not forget that all of these efforts and projects are and should be for the benefit of the people. Mozambicans are eagerly waiting for the benefits their gas will give to them, and we should be focusing on making them see and receive such benefits. We must not concede or surrender. We have to find a way to fight for the project and for the people.”
He concedes that while Total’s force majeure declaration is a legal instrument at its disposition to procure its objectives and compromises with its lenders and the government, “we firmly believe that Total will do whatever it takes to stand with Mozambique and its people. Total is not only an international company. It is an African company as well, as it is one of its most prominent investors and employers,” he notes.
He said Total’s connection to the African people goes far beyond its investments at a macro level; adding that while many other multinational companies have left the continent, Total has remained, “and we believe this commitment to the continent and Mozambique specifically will continue to remain.”
He noted the need for all to “stand together. Let us find a solution to get the Total LNG project going again. Many local and international service companies have invested much money in people, capacity building, materials, and financing, believing in Total’s LNG Project. Such efforts should not be discarded.”