Mozambique and TotalEnergies agreed on Thursday to relaunch construction on the French energy major's $20-billion liquefied natural gas project in the country, even as they continue negotiations over additional costs linked to delays.

Construction was halted in 2021 following Islamist militant attacks in the northern province of Cabo Delgado, where the project is located. TotalEnergies, which has taken extra equity with its partners after some backers pulled out, said late last year it was ready to resume work.

"You will see a massive ramp-up in activity in coming months ... a first offshore vessel has already been mobilized to begin installing the offshore infrastructure," TotalEnergies CEO Patrick Pouyanne said at a ceremony in Afungi, near the project site in Mozambique's northeast.

"We have one target now, which is to deliver the LNG by 2029 on a budget of $20-billion, so there's a lot of work to be done," he added.

TotalEnergies, the project operator and leading shareholder, said it would provide 200-million meticals ($3.2-million) to help Mozambique deal with the effects of recent flooding. 

"Within the next 12 to 18 months, we will return to this place to witness the start of construction on Rovuma LNG," said Mozambican President Daniel Chapo, referring to the Exxon-led project that shares some facilities with Total's. 

SECURITY HAS IMPROVED, COST NEGOTIATIONS ONGOING
Security has improved in Cabo Delgado, particularly with the deployment of Rwandan soldiers around the Afungi construction site. The Islamist insurgency, though weakened, continues to simmer. 

With capacity to produce 13-million metric tons of LNG annually, the project is expected to make Mozambique a major gas exporter and to transform the poor African nation's economy when it comes online. But it has been dogged by security, finance and human rights issues that have spooked some investors. 

In October, TotalEnergies wrote to Chapo estimating that the project's costs had risen by $4.5-billion in the years it had been on hold. It said the consortium wanted the development and production period extended by ten years as partial compensation.

President Chapo said on Thursday the two sides would negotiate to reach a consensus on revised costs once an audit is finalised.

"What must be clear is that negotiations do not impede the project's progress. Restart is a reality," Chapo said.

"These small matters will be resolved as per our contracts and according to the rule of law," Pouyanne said, adding that Total had already received an automatic license extension to cover the nearly five-year construction delay.

TAXES, PROFITS TO BOOST GOVERNMENT COFFERS
Total has already trained about 4 500 workers to be employed on the project, Pouyanne said, with 1 500 young workers being trained in Palma, near the project site, in carpentry, electricity and other trades needed to build the plant.

Chapo said the project could generate as much as $35-billion for government coffers over its lifetime from taxes, oil profits, and other contributions.

TotalEnergies has a 26.5% stake in the Mozambique LNG consortium. Japan's Mitsui owns 20%, with ENH at 15%, and Bharat Petroleum, Oil India, and ONGC Videsh all at 10%. Thailand's PTTEP holds the remaining 8.5% stake.