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Mozambique Looks To End Terrorism Threatening Major LNG Projects

Mozambique's President Filipe Nyusi has held talks with his counterpart in neighboring Tanzania to prepare a wider regional response to violence from Islamic State-aligned insurgents that threaten the progress of major liquefied natural gas (LNG) projects in Mozambique.

The presidents of Mozambique and Tanzania have agreed to resume a joint commission on defense and security, Mozambican President Nyusi said on Monday, as carried by Bloomberg.

The terrorists who affiliate themselves with the notorious Islamic State have stepped up violent actions in recent weeks, with attacks getting closer to a project led by French supermajor Total located in northern Mozambique close to the border with Tanzania.

Last week, Total told Bloomberg in an emailed statement that the company had "temporarily reduced its workforce on site in response to the prevailing environment," referring to the attacks from the terrorists.

The Total-led Mozambique LNG Project, for which the US$20-billion Final Investment Decision (FDI) was taken in 2019, is on track to deliver LNG in 2024, Total says.

Total signed in August 2020 a pact with the government of Mozambique to bolster security for its LNG project.

In July last year, Total had secured as much as US$16 billion in funding for its LNG project in Mozambique despite the supply glut and demand decline in the LNG market.

The financing agreement "shows continued progress on project implementation despite security challenges and lower medium-term hydrocarbon prices, raising the prospect of significant positive effects on Mozambique's growth and public finances in the longer run," Fitch Ratings said after Total secured the funding.

While Total secured financing for its project, ExxonMobil has delayed the FID on its US$30-billion Rovuma LNG project to 2021 due to low commodity prices and Exxon's need to cut investments globally. This will delay the start of production by one or two years, to around 2025-2026, Fitch says.    

By Tsvetana Paraskova for Oilprice.com

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