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    Violence in Mozambique poses global threat to LNG: Rystad

Summary

Total declared force majeure last month in the face of threats from Islamist militants.

by: Daniel Graeber

Posted in:

Complimentary, Natural Gas & LNG News, Africa, Liquefied Natural Gas (LNG), Political, News By Country, Mozambique

Violence in Mozambique poses global threat to LNG: Rystad

Violence in Mozambique could pose a long-term threat to LNG developments in the country, upending the global market for years to come, Norwegian consultancy Rystad Energy said May 5.

French energy company Total declared force majeure on its Mozambique LNG project on April 26 after attacks in the gas-rich north of the country by Islamist insurgents.

Islamist group Al-Shabaab launched a major attack on the town of Palma in the northern Cabo Delgado region on March 24, just hours after Total announced that it was resuming construction on the $20bn Mozambique LNG project after the government beefed up security at the site.

Palma was finally retaken on April 5, but the fighting left dozens of civilians dead and thousands more displaced.

Violence from Al-Shabaab also threatens ExxonMobil's planned Rovuma LNG facility. Both projects are now in limbo, prompting Rystad to reassess its forecast for the global LNG market balance.

In its updated forecast, the company expects the LNG market to be oversupplied by about 4mn mt/yr in 2026, tighter than its previous forecast of 6.4mn mt/yr. By 2028, the oversupply could be down to 1mn mt/yr against a previous estimate of 9.3mn mt/yr, while by the following year a supply deficit of 5.6mn mt/yr could exist.

Would-be buyers of Mozambique LNG therefore will need to bide their time and vet alternate supplies until the situation improves.

“This is likely to create upward pressure on prices as end-users search for alternative suppliers and portfolio players seek to cover short positions,” Rystad said. “Those without long-term contract coverage risk having to buy from an increasingly volatile spot market.”