Africa-Press – Mozambique. French energy giant TotalEnergies had “good” discussions with Mozambique LNG contractors and they agreed not to inflate the costs of the contracts, according to Patrick Pouyanné, CEO of TotalEnergies. Last Friday, Pouyanne said that he will “soon” meet with the President of Mozambique to discuss security in the country and the restart of the giant project.
TotalEnergies declared force majeure on the Mozambique LNG project in April 2021 and withdrew all personnel from the site due to new attacks.
Mozambique LNG includes the development of offshore gas fields in Mozambique’s Area 1 and a 12.8 mtpa liquefaction plant at the Afungi complex.
Besides TotalEnergies, other partners in the project are Japan’s Mitsui, Mozambique’s ENH, Thailand’s PTT, and Indian firms ONGC, Bharat Petroleum, and Oil India.
The project’s EPC contractor is CCS JV, a venture between Saipem, McDermott, and Chiyoda.
Last year, Pouyanné said the company was “not in a hurry” to resume the project, pointing out that security, human rights, and maintaining costs are the main three elements to make the decision to return to the Afungi site in the province of Cabo Delgado.
Pouyanné said in September the last condition for the company and its partners to resume the project is that the “contractors stick to their EPC contracts and not inflate the costs, otherwise we can wait longer.”
In February, he said that TotalEnergies hopes to resume construction on its giant Mozambique LNG project by the middle of 2024, with TotalEnergies “remobilizing the contractors”.
Asked about whether Mozambique LNG should be delayed or perhaps reengineered a bit following some of the recent cost inflation during the company’s first quarter results call on Friday (April 26), Pouyanné said that the restart of the project is not a matter of cost.
“I know one of my colleagues wants to float that idea, but it’s not true. I mentioned that few months ago that we were discussing with contractors on Mozambique because they raised their costs,” he said.
“We had good discussion with them. So the good news that I can confirm today is that in fact, we are back to.. we are on the good contracts with all of them. We realigned all the contractors because their interest is that we can execute the project. The interest is not to force us to retender or redesign,” he said.
Pouyanné said that “we have a good concept, strong concept, resilient one. So we work with all of them. And today, we have contracts which have been initial to restart the project. But we have other dimension in that project.”
“And again, on the security side, I would say there have been a lot of things. The security in northern Cabo Delgado is okay. There is no incidents, no events. It’s well controlled. I will meet soon President Nyusi from Mozambique to review it with himself,” he said.
“And so I would say on the southern part of Cabo Delgado, it’s quite far from where we are. There have been some incidents. But there again, they are redeploying some forces,” he said.
“And by the way, again, that part is first, I would say people are asking me, will you lift the force majeure. But the first thing to be done by Mozambique, which is in charge of the sovereignty and security, is to tell us if we could lift it before I decide,” he said.
“Let’s do it in the right order. I would say don’t try to ask privately owned companies to decide about something which is not fully in our hand.. It is the duty of Mozambique, and we are working with them,” he said.
He said the restart of the project is a “matter of having the right conditions to lift the force majeure and to move on progressively.”
TotalEnergies SE, Q1 2024 Earnings Call, Apr 26, 2024 (partial transcript)
Operator: Ladies and gentlemen, welcome to TotalEnergies First Quarter 2024 Results Conference Call. [Operator Instructions]. I now hand you over to Mr. Patrick Pouyanne, Chairman and CEO; and Jean-Pierre Sbraire, CFO, who will lead you through this call. Sir, please go ahead.
Patrick Pouyanne: Good morning, and good afternoon, everyone, for this quarterly result session. I’m happy to welcome you together with Jean-Pierre, who will go through all the details of these good, strong results in first quarter 2024. But before to do it, I would like to highlight the way we have implemented our 2-pillar strategy during this quarter. And first, to celebrate this — to recognize that the company celebrated its 100th year anniversary on March 28.
Operator: The next question is from Michele Vigna with Goldman Sachs.
Michele Vigna: Congratulations on the strong capital discipline and the ongoing upgrading of the portfolio. I think you mentioned P&G, that’s definitely a great example where cost inflation has led you to rethink or at least delay the project. I was wondering which other projects in your portfolio you think should be delayed or perhaps reengineered a bit following some of the recent cost inflation. Mozambique is certainly 1 where it feels like some of the bids have come back a little bit on the high side. And my second question is — goes back to the idea that you floated off a U.S. primary listing. Clearly, the big aim there is to be included in one of the major indices, like the S&P 500 which has so much passive and semi-passive following. I was wondering if you’ve had any discussions there and if you think it’s actually something doable to be included in that index while being remaining headquartered in Europe.
Patrick Pouyanne: Actually you know the answer to the second question. And you know that you cannot to be S&P 500. They are not initiated in the U.S., that’s all. So we don’t intend, that’s why we speak about primary listing. But again, when I see — when we discuss with U.S. shareholders, being for them having access directly to your shares in New York would be a plus compared to going through this ADR or to the Paris market to buy shares. I think that’s what we think about it. We see clearly more appetite on the North American site for energy companies, oil and gas companies was in Europe. So it’s — we are studying what could be, again, to facilitate their appetite by offering them easier access to share that’s the idea. But the index might be abused, but it’s not in the agenda to be clear, because we don’t speak about the initiation, we speak about primary listing. That’s earned. On the first one, no, honestly, on Mozambique, we don’t face at all. I know one of my colleague wants to float that idea, but it’s not true. I mentioned that few months ago that we were discussing with contractors on Mozambique because they raised their costs. We had good discussion with them. So the good news that I can confirm today is that in fact, we are back to — we are on the good contracts with all of them. We realigned all the contractors because their interest is that we can execute the contract — project. The interest is not to force us to re-tender or redesign, or I don’t know which [indiscernible]. So we have a good concept, strong concept, resilient one. So we work with all of them. And today, we have contracts which have been initial to restart the project. But we have over dimension in that project. And again, on the security side, I would say there have been a lot of things. The security in northern Cabo Delgado is okay. There is no incidents, no events. It’s well controlled. We will meet — I will meet soon, President Nyusi from Mozambique to review it with himself. And so I would say on the southern part of Cabo Delgado, it’s quite far from where we are. There have been some incidents. But there again, they are redeploying some forces. And by the way, again, that part is first, I would say people are asking me, will you lift the force majeure. But the first thing to be done by the State of Mozambique, which is in charge of the sovereignty and security, to tell us if we could lift it before I decide. Let’s do it in the right order. I would say don’t try to ask privately owned companies to decide about something which is not fully in our hand, security of that vision. It’s the first duty, it is the duty of the State of Mozambique, and we are working with them. So I would say we are — so it’s not a matter of cost, this one. It’s more a matter of having the right conditions to lift the force majeure and to move on progressively, probably because it has to be done. To restart, we’ll try — we have to — want to — remobilizing this stuff will take time. So — but it’s not a cost. (… )
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