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Another investor stalls on Mozambique citing security concerns

PORTUGAL’S Galp Energia, a partner in an ExxonMobil-led gas consortium in Mozambique, will not invest in onshore plants there until authorities guarantee security and social stability, which may take time, CEO Andy Brown said.

This marks a second setback to Mozambique’s hopes to develop a big liquefied natural gas (LNG) hub in the coming years after TotalEnergies suspended its own, separate LNG project in the country.

Attacks by militants in northern Mozambique’s Cabo Delgado region, near the $30bn Rovuma LNG project, have forced hundreds of thousands of people to flee the area.

The Mozambican government has said it expects the consortium to take the final investment decision, already postponed from 2020 due to the coronavirus pandemic, this year.

But the CEO of Galp, which has a 10 percent stake in the consortium, told Reuters on Monday his company did not include investments in Rovuma’s onshore facilities in its net capital expenditure plan for the next five years.

‘It means that at the moment it’s very hard for us to predict when the time to invest will be,’ Brown said.

‘Last year we were really planning to have built Rovuma by 2025 and I don’t want to make a promise on Rovuma and then disappoint the market again,’ he said.

Exxon did not immediately respond to a request for comment and the other big partner, Italy’s ENI, declined to comment.

‘Before Galp starts investing in the project, the government needs to work with the local population to create the right sort of stability and social cohesion, as well as security, on the ground … That may take a while,’ Brown said.

Brown said once France’s TotalEnergies, which stopped construction of a separate LNG project near Rovuma due to the latest attacks in March and is working with Mozambique to ensure stability in the area, has reliably resumed the works, ‘we will be in a position to consider our own project.’

Despite the setbacks, Mozambique with its attractive gas projects is ‘a really important country for Galp,’ Brown said, and the consortium is ‘working to get the cost to a level where this project is really competitive.’

Brown said that over the next five years, Brazil will absorb ‘the vast majority’ of the €320m-€400m of net capex that Galp has allocated to upstream annually, while there will be ‘some investment in floating LNG in Mozambique and some small investments in Angola.’

The investments in Brazil will be ‘mostly allocated to already sanctioned developments, including the Bacalao I,’ he said.

 

 

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