Mozambique's $20 Billion LNG Gamble: A High-Stakes Bet in Africa's Energy Transition

Mozambique's decision to revive its $20 billion LNG project in Cabo Delgado marks a pivotal moment in the global energy transition—and a bold test of risk tolerance in emerging markets. After a three-year hiatus caused by Islamic State-linked insurgencies, the project is now on track to restart mid-2025, with TotalEnergies and its partners cautiously optimistic. This resurgence reflects both the strategic importance of LNG in bridging the gap to net-zero and the precarious calculus of investing in politically unstable regions. For investors, the question is whether the potential rewards outweigh the acute risks.

Security and Geopolitical Risks: A Fragile Calculus

The project's revival hinges on two key assumptions: that security in Cabo Delgado has stabilized sufficiently to protect assets, and that Mozambique's government can maintain political stability to secure long-term financing. While military offensives by Mozambique and regional allies have reduced insurgent attacks, the threat persists. In 2025 alone, 26 militant incidents were recorded near the Afungi site, up from 16 in 2024. Child abductions and territorial clashes remain frequent, raising concerns about both human rights and operational continuity.

TotalEnergies has deployed private security and partnered with local forces, but its internal investigations have flagged allegations of abuses by Mozambican troops. These issues could complicate international financing and partnerships, as seen in the pending $7 billion loans from U.K. and Dutch export credit agencies. Investors must monitor not only security metrics but also geopolitical shifts, such as France's continued diplomatic support for TotalEnergies or potential backlash from human rights groups.

Financial and Market Realities: A Bridge Fuel in a Changing World

The project's $20 billion price tag is justified by its potential to become Africa's largest LNG facility, with a capacity of 43 million tonnes per year by 2029. This aligns with global trends: LNG demand in Asia and the Middle East is projected to grow 3% annually through 2030, driven by coal displacement and industrialization. However, the market is also facing an oversupply crisis, with U.S., Qatari, and Russian projects set to flood the market by 2026.

TotalEnergies' delayed timeline—pushed back from 2022 to 2029–2030—could be a strategic advantage if demand recovers post-2030. Yet the company's reliance on public financing is a double-edged sword. Mozambique's government has already secured disproportionate public support for the project, with 60 times more funding allocated to LNG than renewables. This raises questions about long-term sustainability, especially as global climate commitments intensify scrutiny of carbon-intensive projects.

Environmental and Social Risks: A “Carbon Bomb” or a Just Transition?

The Afungi plant is projected to emit 10 million tonnes of CO₂ annually, a figure environmental groups have dubbed a “carbon bomb.” TotalEnergies has responded with carbon capture pledges and rhetoric about LNG's lower emissions compared to coal, but these efforts may not satisfy activists or lenders. The International Monetary Fund (IMF) has historically over-estimated LNG revenues for Mozambique, contributing to corruption and conflict. Now, with the country already in a debt crisis, further public financing for a project that emits 10 million tonnes of CO₂ annually could strain credibility.

For investors, the social license to operate is equally critical. Displacement of 1.3 million people during the insurgency and ongoing tensions with local communities could escalate into protests or sabotage. TotalEnergies must demonstrate tangible benefits for Mozambicans, such as job creation and infrastructure investment, to mitigate reputational and operational risks.

Investment Advice: A High-Risk, High-Reward Proposition

The Mozambique LNG project is a textbook example of a high-growth, high-risk emerging-market investment. For those willing to tolerate volatility, the potential payoffs are significant: TotalEnergies' diversified energy portfolio could buffer project-specific risks, and the plant's eventual output could secure a niche in the post-2030 LNG market. However, investors should adopt a cautious approach:

1. Monitor Financing Approvals: The U.K. and Dutch government's human rights reviews will determine whether $7 billion in loans materialize. Delays could push the project's completion to 2030, increasing costs and reducing profitability.
2. Hedge Against Security Risks: Insurers and reinsurance firms are likely to charge a premium for operating in Cabo Delgado. Investors should assess how TotalEnergies and its partners manage these costs.
3. Time Entry Strategically: With the project now resuming, the next 12–18 months will clarify financing and security trends. Entering before these uncertainties resolve could amplify downside exposure.

Conclusion: A Test of Resilience

Mozambique's LNG project is more than an energy investment—it's a litmus test for whether LNG can coexist with the energy transition. For TotalEnergies, it represents a bet on its future in Africa; for Mozambique, a lifeline to economic transformation. But success will require navigating a minefield of security, political, and environmental risks. Investors who choose to back this project must do so with eyes wide open, recognizing that the next few years will determine whether this gamble pays off or becomes another cautionary tale of emerging-market hubris.

In the end, the Afungi LNG plant may not only reshape Mozambique's economy but also redefine the boundaries of what's possible in high-risk energy markets. Whether it becomes a symbol of resilience or a cautionary tale depends on how well stakeholders manage the delicate balance between ambition and caution.