Negotiations between Mozambique and TotalEnergies to restart the liquefied natural gas (LNG) project have entered the final stage. The project had been indefinitely postponed due to the deterioration of the local situation. With the restart negotiations entering the final stage, the LNG carrier order that HD Hyundai Samho and Samsung Heavy Industries have been waiting for for five years is expected to be finalized.
According to Tanzania Petroleum, a Tanzanian oil and gas publication, Mozambican President Daniel Francisco Chapo recently met with TotalEnergies and expressed his willingness to expedite negotiations to restart the LNG project, which was suspended four years ago due to force majeure. This is the largest foreign investment project in African history and is operated by TotalEnergies.
Daniel Francisco Chapo said, “I met with TotalEnergies CEO Patrick Pouyanné in early July to discuss the restart of the Mozambique project, and everything is progressing smoothly. Negotiations on the project restart are expected to be completed in August.”
The Mozambique LNG project aims to develop the Golfinho and Atum gas fields in Area 1 offshore Mozambique and construct and operate two LNG liquefaction plants. The project began in 2010 with the discovery of significant natural gas reserves off the northern coast of Mozambique, with proven reserves totaling 150 trillion cubic feet. The project received its final investment decision (FID) in 2019. TotalEnergies plans to implement two projects, with an expanded annual production capacity of 43 million tons per annum (MTPA), with a total investment of US$20 billion.
Based on this project, TotalEnergies plans to build 40 new LNG carriers and signed a letter of intent (LOI) with HD Hyundai Samho and Samsung Heavy Industries in 2020 for the construction of the first 17 LNG carriers. Nine of these vessels will be constructed by HD Hyundai Samho, with Japanese shipowners Mitsui O.S.K. Lines (5 vessels) and Kawasaki Kisen Kaisha (4 vessels) as the shipowners placing the orders; Samsung Heavy Industries will be responsible for constructing the remaining 8 vessels, with Japanese shipping company Nippon Yusen Kaisha (4 vessels) and Greek Maran Gas Maritime (4 vessels) as the shipowners placing the orders.
However, in 2021, due to the deteriorating security situation in Mozambique, TotalEnergies declared the project to be in a state of force majeure and withdrew from the site, putting the project on long-term hold and halting the related new shipbuilding project.
Since then, the project’s restart schedule has been adjusted several times. However, with the recent re-inspection of on-site infrastructure and discussions on the restart schedule, the project’s restart has made substantial progress. This also means that HD Hyundai Samho and Samsung Heavy Industries, which have been waiting for five years, are expected to receive orders for LNG carriers.
At present, HD Hyundai Samho Heavy Industries and Samsung Heavy Industries have accepted TotalEnergies’ request to extend the contract, extending the validity period of the letter of intent from April 2025 to the end of August 2025, and reserving 9 and 8 LNG carrier slots for them, respectively.
The Mozambique LNG carrier project faces another significant challenge: BNP Paribas, France’s largest financial institution, has ceased investment in the project. This means the bank will not participate in the ship financing of the 17 LNG carriers involved in the Mozambique LNG project, nor will it participate in export terminal investments, such as FLNG. Another French bank, Credit Mutuel, also recently announced it will no longer provide financial support for LNG carriers.
The decision by the two major French banks has also made it more difficult to restart the project. However, the Export-Import Bank of Korea is actively promoting project investment or continuing to review investment.