Mozambique’s President Filipe Nyusi has been harping about the same issue whenever an opportunity presents itself, that is, that security conditions have improved in the northern Cabo Delgado province for Total’s resumption of activities in the Afungi pensinsula.
Total declared ‘orce majeure in April 2021 which resulted in the suspension of its $20 billion Area 1 liquified natural gas (LNG) development in the Afungi peninsula, following an insurgent attack to the town of Palma, some 20-odd kilometres from the Afungi site.
It is true that insurgent attacks in Cabo Delgado have subsided, suggesting that perhaps the insurgency could be in its last legs.
Internally, political figures and the media echo Nyusi’s remarks and go far to suggest that Total is blackmailing Mozambique, as suggested on Thursday by the weekly Dossiers & Factos, which begs the question of what would be the end game, and what benefit could it derive from the alleged blackmail.
As for a timeline for Total’s return, analysts have been saying that it is likely to be in July, quoting Alessandro Puliti, the Chief Executive Officer of the Italian engineering company, Saipen, which was subcontracted by Total.
But the French oil giant has yet to confirm this, with Total’s chairman and CEO, Patrick Pouyanne, saying that he was in no hurry to restart.
Critically, it was the issue of rising costs of operations and equipment, hence Pouyanne said that Total was reengaging with contractors to ensure prices remained in the ranges prior to the force majeure.
Comment
Mozambique Insights understands that it is all about risk management for Total. Parsing the words of Pouyanne that he would love to travel around Cabo Delgado with no army, but alone, it is somewhat clear that he is concerned about the security and well-being of his staff, especially French and European nationals.
Furthermore, Pouyanne said that it was not Total’s decision, but all the partners should be on board, including Mozambique’s own ENH, Mozambique Hydrocarbon Company. This could be seen as Total passing the buck
Sources tell Mozambique Insights that ultimately Total must protect its capital and earnings. Since it is listed in the world’s most influential stock exchanges, Total would not want its stock to fall should any incident involve its staff and partners.
Consequently, Total is managing the risk that a threat from an insurgent attack could cause to its bottom line, hence it is in no hurry to return – Nyusi’s calendar is not Total’s calendar.
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