By Jorge Joaquim
The chief executive of French oil and gas multinational Total has asserted that the company will resume work on its suspended natural gas project in Mozambique, which it evacuated after the terrorist attack on the nearby town of Palma in March.
Patrick Pouyanné was speaking after meeting President Filipe Nyusi while the latter was on an official visit to France, to attend the Summit on the Financing of African Economies.
“We faced a dramatic situation in Cabo Delgado [province], in Palma, recently, so we had to make decisions….not to keep personnel in Afungi,” Pouyanné said. “But let me be clear: we are fully trusting the government of Mozambique, in the ability to win this war… and as soon as Cabo Delgado has peace again, Total will come back,” he added.
According to a statement from the president’s office, Pouyanné denied rumours that Total was preparing to abandon the project, saying: “Total remains committed to its project in Mozambique. Natural gas is in great demand in the world for the planet, it is important energy, it is a priority; that is why we remain committed”.
Much of Mozambique’s forecast economic growth depends on the project, which was due to start production in 2024.
The delay in the development of the natural gas projects will increase the risk of the government defaulting on its debt, consultancy firm Capital Economics (CE) has said.
CE says that the delay will decrease government revenues, officially estimated at $100bn over 25 years, which were key to sustaining the public finances of Mozambique, whose debt to GDP ratio stands at 122%.
The consultancy points to the restructuring of public debt after the so-called “hidden debts” scandal as one of the causes, because the government negotiated a reduction in interest payments until gas exports were due to begin in 2023, followed by a near-doubling of repayments from the following year.
According to CE, the government should be able to withstand the situation as long as the two gas projects of Total and Eni move forward, even with delays, but if ExxonMobil does not go ahead with its project, it will be difficult to bring the debt to GDP ratio down and state-owned oil and gas company ENH will struggle to repay its debt.