TotalEnergies Demands 10 More Years and $4.5B Cost Overrun Compensation for Mozambique Gas Project (2025 Update)

• Why Is TotalEnergies Seeking a 10-Year Extension?
• Breaking Down the $4.5 Billion Compensation Claim
• How Does This Impact Mozambique’s Economic Outlook?
• What’s the Current Security Situation in Cabo Delgado?
• How Are Investors Reacting?
• What’s Next for the Project?
• Frequently Asked Questions

TotalEnergies is pushing for a decade-long extension and a staggering $4.5 billion compensation for cost overruns in its Mozambique gas project, as security concerns and logistical hurdles continue to plague the venture. The French energy giant’s demands highlight the escalating challenges of operating in Cabo Delgado, where insurgent attacks have delayed production since 2022. This article breaks down the financial implications, historical context, and what this means for Africa’s largest LNG investment.

Why Is TotalEnergies Seeking a 10-Year Extension?

In my experience covering African energy projects, few have faced as many setbacks as Mozambique’s $20 billion LNG venture. TotalEnergies declared force majeure in 2021 after ISIS-linked militants attacked Palma town, just miles from the project site. Now they’re asking to push the timeline to 2035, arguing that rebuilding security infrastructure requires years more work. The company’s latest progress report shows only 60% of workforce housing has been reconstructed since the 2022 restart.

Breaking Down the $4.5 Billion Compensation Claim

Let’s talk numbers – that $4.5B isn’t just plucked from thin air. According to documents filed with Mozambique’s government, the breakdown includes:

• $1.8B for additional security measures (including a 5km maritime exclusion zone)
• $1.2B in supply chain disruptions after the Ukraine war spiked material costs
• $900M for workforce evacuation/redeployment
• $600M in contractual penalties to subcontractors

An analyst from TradingView noted this could set a precedent for resource projects in volatile regions.

How Does This Impact Mozambique’s Economic Outlook?

Mozambique was banking on this project to transform its $17 billion GDP. The delayed timeline means:

• Projected LNG revenues won’t hit state coffers until at least 2030
• Local employment targets missed by 40% (currently just 2,800 Mozambican workers vs. promised 5,000)
• Downstream industries like fertilizer plants remain on hold

The IMF had projected the project WOULD boost GDP growth by 5% annually – those estimates are now being revised.

What’s the Current Security Situation in Cabo Delgado?

Source: AFP

Despite 3,000 Rwandan and SADC troops deployed since 2021, the province remains unstable. Just last month, insurgents attacked a convoy 50km south of the project site. TotalEnergies has spent $400 million on:

• A 24/7 drone surveillance system
• Bulletproof worker transports
• Underground emergency bunkers

As one security consultant told me: “It’s like building a Tesla factory in active warzone.”

How Are Investors Reacting?

TotalEnergies’ stock (TTE:EPA) dipped 2.3% on the news, though it’s still outperforming Shell and BP YTD. The project’s partners – including Japan’s Mitsui and Thailand’s PTTEP – haven’t publicly commented, but sources say they’re negotiating cost-sharing terms. Interestingly, cryptocurrency markets barely blinked – Bitcoin mining operations in nearby Malawi continue expanding, with some miners using flare gas from Mozambican fields.

What’s Next for the Project?

The Mozambican government faces a tough choice:

• Option 1: Accept demands and risk setting unfavorable precedent
• Option 2: Renegotiate terms and further delay revenue
• Option 3: Seek new partners (China’s CNOOC has expressed interest)

Industry analysts suggest a compromise where TotalEnergies absorbs 30-40% of overruns. Whatever happens, this saga proves that in energy geopolitics, nothing’s ever simple.

Frequently Asked Questions

When did TotalEnergies first suspend the Mozambique project?

The company declared force majeure in April 2021 following insurgent attacks NEAR Palma, restarting limited operations in Q3 2022.

How much gas does the Mozambique project hold?

The Area 1 concession contains estimated recoverable resources of 75 trillion cubic feet - enough to power Japan for 15 years.

What percentage does TotalEnergies own in the project?

The French major holds 26.5% operating stake, with Mitsui (20%), ENH (15%), and others holding the remainder.