MOZAMBIQUE: Dramatic escalation of security threat to LNG ventures

Total evacuated most of its personnel from Palma and the Afungi peninsula last week, ahead of insurgent attacks on the doorstep of its LNG site on 1 January. Total’s unprecedented measure and extensive insurgency-related disruption to transport along mainland and maritime routes represent a major setback for a project on which Mozambique’s entire sovereign outlook hinges. On 1 January, insurgents reportedly attacked Quitunda, a village where Total is resettling residents from other areas of the Afungi peninsula. At the same time, a camp of the riot police (UIR) on the main road to the Afungi site was also attacked. The full number of casualties is not yet clear. Despite contradictory accounts, the actual perimeter of the LNG site does not appear to have been breached and no direct damage to Total’s assets has been reported. Nevertheless, Quitunda falls within Total’s land lease area (Direito do Uso e Aproveitamento da Terra (DUAT), outlined in the map below). The proximity of the attacks to the LNG industrial area (outlined in blue below) underlines just how much the escalating insurgency has encroached into Total’s area of operation. Throughout 2020, the Islamist insurgency in Cabo Delgado province, which first started in 2017, has been escalating; Ahlu Sunnah Wa-Jamo (ASWJ), known locally as ‘al Shabaab,’ pledged their allegiance to Islamic State Central Africa Province (ISCAP) in 2019. A game-changing strategic event that has allowed the insurgents to close in on Afungi was the August 2020 capture of Mocimboa da Praia, a small port town about 55km south of Afungi, which ASWJ has since declared as the capital of its province. Previously, the insurgents had only been able to hold territory for short periods of time before being pushed back by the armed forces. With Mocimboa da Praia as a staging post, the town has expanded the insurgents’ strategic control over land and maritime routes. Indeed, on 9 and 24 December, groups of around 100 insurgents attacked the village of Mute, about 21km south of Afungi. On 29 December, an insurgent attack came as close as Mondlane, within about 5km of the LNG site’s border fence. Beyond the 1 January attacks, the insurgents have also threatened to attack Palma on 5 January. Despite a heavy security forces presence around the LNG site, the latest developments put the security of Total’s operations in doubt. Adding to already-immense logistical challenges will be a temporary ban by the military on maritime transport to Palma and Afungi. Overland transport had become next to impossible but for a single, poor-quality overland route via Mueda, in the interior of Cabo Delgado province, which the insurgents have reportedly now closed. This will make it next to impossible to transport construction materials to the LNG site, at least in the short term. A hiatus in the project now seems reasonable to assume, and it could be prolonged. Speculation may even arise as to whether Total might abandon its Mozambique venture, though this seems somewhat premature given investments already made and the final investment decision taken in June 2019. A potential turning point in the conflict could be if Total pushes President Filipe Nyusi for greater external support, given that the military, backed by private security firm Dyck Advisory Group, have failed to keep the fast-spreading insurgency at bay. Any form of LNG delay raises bigger strategic questions for the government, which is deeply dependent on the LNG ventures to extricate itself from its protracted debt crisis. A final investment decision on the second LNG project – operated by Exxon – is already on ice, at least until 2021 and possibly until 2030. Eni’s smaller, floating LNG facility is less affected by the conflict onshore, but the growing maritime threat posed by the insurgents and the military’s temporary ban on shipping in the area could complicate the project. If the Total project were to stall for any prolonged period of time, the timeline for LNG revenue coming on stream would become even more uncertain.

January 4, 2021

Africa

MOZAMBIQUE: Dramatic escalation of security threat to LNG ventures

BY Anne Frühauf

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MOZAMBIQUE: Dramatic escalation of security threat to LNG ventures

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