TotalEnergies, while announcing a $4.5 billion increase in the cost of its Mozambique gas project, requested a 10-year extension to its concession. This adjustment presents major economic and regulatory challenges for the Mozambican state.

Four years after work was suspended following militant attacks in Cabo Delgado province, TotalEnergies is preparing to restart the Mozambique LNG project, now estimated at $24.5 billion, up from an initial $20 billion.

In a letter dated Oct. 24 to Mozambican President Daniel Chapo, TotalEnergies CEO Patrick Pouyanné outlined the impact of the four-year force majeure suspension and sought approval for a revised budget and a 10-year extension of the Golfinho-Atum gas field production period.

The company justified its request by citing accumulated delays and rising security and logistics costs. While TotalEnergies did not explicitly link the $4.5 billion cost increase to new U.S. steel tariffs, it has previously warned that tariffs on construction materials could drive up infrastructure costs.

Four years after work was suspended following militant attacks in Cabo Delgado province, TotalEnergies is preparing to restart the Mozambique LNG project, now estimated at $24.5 billion, up from an initial $20 billion.

TotalEnergies said the longer operating period is needed to recover new investments, spread returns over a longer timeframe, and maintain the project’s financial viability.

The request has triggered a regulatory review involving three institutions: the Ministry of Mineral Resources and Energy, the petroleum regulator, which must assess the added costs, and the Council of Ministers, which must approve any change in production terms. Approval from all three is required before work can resume.

The petroleum regulator is currently preparing its own assessment of the project’s additional costs, but has not said when it will be completed. That evaluation is a prerequisite for government approval of the revised budget and the formal restart of operations. The project’s timeline has already been delayed: first LNG production, once expected in July 2024, is now projected for the first half of 2029.

Political and Financial Challenges

On the ground, the project remains fragile. TotalEnergies plans to resume operations under a restricted-access model, with limited sea and air routes and reinforced security. Although the security situation has improved, largely due to Rwandan military support, Cabo Delgado remains vulnerable to sporadic insurgent attacks. Investor confidence, the government acknowledges, depends on long-term stability in the region.

Although the security situation has improved, largely due to Rwandan military support, Cabo Delgado remains vulnerable to sporadic insurgent attacks. Investor confidence, the government acknowledges, depends on long-term stability in the region.

Financing is another critical issue. The Mozambique LNG project relies on a mix of equity, commercial loans, and public agency funding, including a $4.7 billion loan pledged by the U.S. Exim Bank. However, U.S. and Mozambican non-governmental organizations have filed legal challenges, alleging procedural violations and non-compliance with environmental standards. A suspension of this financing could undermine the project’s overall funding structure.

The United Kingdom is also reconsidering its participation. London has sought legal advice to review the legality of a $1.15 billion commitment made in 2020 by UK Export Finance (UKEF). Officially, the review aims to ensure compliance, but it coincides with growing environmental pressure. NGOs such as Friends of the Earth have opposed the project since 2020, arguing it contradicts the UK’s climate pledges. Although courts upheld UKEF’s involvement, the UK’s position remains politically delicate given its COP26 promise to stop financing overseas oil and gas projects.

Amid this uncertainty, the overall cost increase poses a new challenge. TotalEnergies and its partners must determine how to distribute the additional financial burden and whether lenders will accept the project’s revised economics.

For Maputo, the 10-year extension request represents a delicate political decision. The project is a cornerstone of Mozambique’s economic strategy, expected to transform the country’s finances and boost public revenue. The government must balance the need to keep the project attractive to TotalEnergies and its partners with the national interest, ensuring that long-term gains benefit Mozambique.

TotalEnergies considers Mozambique LNG a strategic asset, with around 90% of future gas output already sold under long-term contracts in Asia and Europe. Once completed, the project would significantly strengthen the company’s global LNG position and make Mozambique one of the world’s major LNG exporters.

TotalEnergies considers Mozambique LNG a strategic asset, with around 90% of future gas output already sold under long-term contracts in Asia and Europe. Once completed, the project would significantly strengthen the company’s global LNG position and make Mozambique one of the world’s major LNG exporters.

Before that can happen, however, several hurdles remain, including regulatory approval of the revised budget, securing financing, and ensuring lasting stability in Cabo Delgado. These conditions will determine whether TotalEnergies’ planned restart becomes a reality or just another delay in the turbulent history of Mozambique LNG.

Olivier de Souza