TotalEnergies’ Return to Cabo Delgado Comes at a High Cost
TotalEnergies’ decision to lift the force majeure on its Mozambique liquefied natural gas (LNG) project marks a significant step toward resuming operations in Cabo Delgado. However, this move comes with an additional cost of US$4.5 billion—highlighting the financial toll of terrorism and weak resource governance in the region.
The project’s four-and-a-half-year suspension due to the ongoing insurgency has added significantly to the overall investment. Since 2017, the region has faced persistent threats from terrorist groups, which have disrupted not only the LNG project but also the lives of local communities. The company’s CEO, Patrick Pouyanné, communicated this stance to Mozambique’s President Daniel Chapo in a letter dated 24 October 2025, emphasizing that these costs should be recognized as part of the investment. This could reduce the project’s profits and the country’s tax revenue.
While the letter does not specify how the US$4.5 billion was spent during the project’s halt, it underscores the growing financial burden on both the company and the government. This may be just the beginning of a series of expenses related to the conflict, as negotiations between TotalEnergies and the government are set to begin soon.
The Rising Costs of Gas Exploration
Gas exploration in Cabo Delgado has become increasingly expensive since the outbreak of terrorism. Until a sustainable solution is found for the conflict, the risk of rising costs will remain high. Companies operating in such environments face higher security expenses for their assets and staff, which are recorded as investment costs and can be deducted from revenues and taxes.
The roots of the insurgency are complex, but many experts link it to the discovery of gas reserves and the subsequent start of exploration projects. Local communities did not benefit from job opportunities due to a lack of required professional skills. Additionally, the government expropriated community land to allocate it to gas companies, restricting access to the sea for fishing—a primary source of livelihood in rural areas. These factors contributed to the radicalization of local populations, who later joined terror groups.
Instead of addressing the root causes of the conflict, the government deployed military and police forces and hired foreign private military companies to counter the violence. Rather than tackling poverty, inequality, and ethno-religious disputes, the approach exacerbated tensions. In some cases, residents were harassed or abused by security forces, accused of collaborating with insurgents, which only fueled further instability.
A Failed Government Response
After years of failed responses, insurgents attacked the town of Palma in March 2024, located near the LNG site operated by TotalEnergies. This led to the declaration of force majeure and the suspension of construction activities. The government then relied on foreign troops from Rwanda and the Southern African Development Community (SADC) to contain the violence. It took nearly five years before TotalEnergies could resume work on the plant.
In addition to the steep extra costs, the company is demanding a 10-year extension of its exploration and production contract in the Rovuma Basin to compensate for the period of suspension. Mozambique has shown little enthusiasm for these conditions, as they would result in significant revenue losses for the state. Extending the concession period by 10 years means the government would have to wait much longer before the project is transferred to its ownership.
The gas exploration contract between the government and TotalEnergies follows a BOOT model—build, own, operate, transfer. This means that at the end of the concession period, the asset reverts to the state, or a new contract must be negotiated for an extension, subject to additional payments by the operator.
The Future of Gas Projects in Mozambique
Although an agreement has yet to be reached between the parties, it appears likely that TotalEnergies will soon resume work on the project. However, violent conflict in the region persists. As a result, the company is expected to operate in a ‘green zone’ model, isolated from local communities, offering even fewer benefits to the surrounding population. This may fuel frustration among locals, further feeding the insurgency.
Another gas project, Rovuma LNG operated by ExxonMobil, is preparing to announce its final investment decision, estimated at around US$30 billion. Like the TotalEnergies project, this is an onshore venture that will likely face similar security challenges.
Despite the current lack of direct attacks on gas facilities, the projects remain under threat as long as the conflict continues. This poses a risk to government gas revenue and the economic stability of the region.
Pathways to Sustainable Peace
To maximize gas gains for the state and extend their benefits to local communities, Mozambique’s government must adopt alternative conflict-resolution approaches beyond the military route, which has proven ineffective on its own. Investing in programs that prevent and counter violent extremism and promote dialogue are key steps towards achieving sustainable peace.
By addressing the underlying causes of the conflict, the government can create a more stable environment for future energy projects and ensure that local communities benefit from the region’s vast natural resources.