Friday, July 12, 2024

Indonesian oil company cancels deal to buy LNG from Mozambique due to terrorist attacks

Pertamina, Indonesia’s main oil company, has announced the cancellation of a contract to buy liquefied natural gas (LNG) from Mozambique, from the TotalEnergies project, which has been suspended since 2021 due to terrorist attacks.
The agreement, signed in 2019, provided for the export of one million tons of LNG to Indonesia annually over a period of 20 years. According to energy portal Argus Media, Pertamina cited “force majeure” as justification for the cancellation, indicating the challenging situation at TotalEnergies’ project in Cabo Delgado, Mozambique.
The TotalEnergies project, valued at more than 20 billion dollars, is considered one of the largest investments of its kind in Africa. However, work has been paralyzed since 2021 due to terrorist attacks in the region. The French oil company announced the suspension of activities in March 2021, declaring the resumption conditional on guaranteeing security in the area.

Mozambique has three development projects approved to exploit the vast natural gas reserves in the Rovuma basin, considered to be among the largest in the world. Two of these projects, led by TotalEnergies (Area 1 consortium) and ExxonMobil and Eni (Area 4 consortium), aim to channel the gas onshore, cool it and export it in liquid form.
The Area 4 project, led by the ExxonMobil and Eni consortium, which has yet to be officially announced, is still under development. Another completed and smaller project, belonging to the Area 4 consortium, involves a floating platform for capturing and processing gas for direct export at sea, starting in November 2022.
The persistence of the conflict in Cabo Delgado, which has plagued the province since 2017, has been a crucial factor in the interruption of operations in the sector. Groups of armed rebels have attacked villages and towns, claiming attacks in the name of the self-proclaimed Islamic State in the region. The conflict has already resulted in more than 4,000 deaths and at least one million displaced people, according to data from The Armed Conflict Location & Event Data Project.
With the cancellation of the contract by Pertamina, the energy sector in Mozambique faces additional challenges, highlighting the complexity of the situation and the need for strategic approaches to guarantee the security and continuity of investments in the region.

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