Total pulls plug from billions of gas project Mozambique after IS attack

Multinational Total stops an indefinite gas extraction project in Northern Mozambique after a bloody attack by jihadist extremists. The French energy company relies on force majeure and is putting a line through the billion-dollar project for the time being.

During the day attack on the coastal town of Palma, over 80 people were killed at the end of last month, both civilians and employees of the energy group. Thousands of inhabitants flee from the city where Total has a headquarters.

$20 billion

Today, the company says that all personnel have been recovered and the construction contracts have been terminated. The company was planning to invest an estimated 20 billion dollars in the gas project and had already released some 15 billion dollars. The statement states that the violence in the province of Cabo Delgado forces the company to leave.

The Mozambican authorities state in a response that Total will return once the situation is fully under control. Maarcceit correspondent Bram Vermeulen considers that the probability of that scenario is small, he tweets:

The northern province of Cabo Delgado has been plagued for years by jihadist groups who have sworn allegiance to terrorist organization IS. But it‘s unclear how close those ties are. More than 700,000 people have fled the battles, which have now claimed more than 2600 lives.

Off the coast of the region lies a large amount of gas. In the huge project, which has been working on for about ten years, several foreign oil companies put together an estimated EUR 50 billion. It should transform poor Mozambique into one of the largest producers of liquefied natural gas (LNG).

Dutch investments

It is still unknown the impact of Totalal’s decision on the Dutch activities in the area. For example, dredging company Van Oord provided hand- and tensioning services in the construction of the pipelines. Last week, the company announced that it would suspend the work and withdraw personnel from Mozambique.

The Dutch Ministry of Finance is considering taking out an export credit insurance of EUR 600 million for the gas project. The ministry has not yet adjusted these plans, but it says it is keeping an eye on the situation.