TotalEnergies' Mozambique LNG: Navigating Risky Shores for LNG Supremacy

The TotalEnergies-led $20 billion LNG project in Mozambique's Cabo Delgado province is poised to restart operations by mid-2025, marking a high-stakes bet on Africa's energy future. While the project represents a massive opportunity to reshape global LNG supply chains, its viability hinges on TotalEnergies' ability to navigate a labyrinth of security threats, human rights controversies, and geopolitical volatility. For investors, this is a classic “high-risk, high-reward” scenario that demands a nuanced assessment of both the project's strategic potential and its existential vulnerabilities.

Security: A Fragile Foundation for Growth

The project's restart follows years of violent insurgency linked to Islamic State affiliates, which claimed over 6,000 lives and displaced 1.3 million people since 2017. While Mozambique's military and Rwandan allies have improved security in recent quarters, sporadic attacks persist. Recent data shows 26 insurgent events in Meluco district alone during the first half of 2025—up from 16 in 2024—highlighting the project's precarious operating environment.

TotalEnergies has emphasized “significantly improved” security conditions, citing government collaboration and military support. However, the company must still contend with rising child abductions (over 120 reported in 2025) and ongoing territorial clashes. The stakes are clear: a single successful militant attack on the Afungi site could derail the project's timeline and financial viability.

Strategic Value: LNG's African Breakthrough

The project's potential rewards are undeniable. At full capacity (43 million tonnes/year by 2029), it would become Africa's largest LNG facility, supplying 5-7% of the continent's total output. With global LNG demand projected to grow by 1.5% annually until 2030—driven by Asia's energy transition and Europe's post-Russian gas dependency—TotalEnergies stands to capture a critical slice of this market.

The U.S. Export-Import Bank's $5 billion loan in March 2025 signals confidence in the project's long-term value, but TotalEnergies still needs $15 billion in additional financing. The company's strong balance sheet (cash reserves of €10.4 billion as of Q1 2025) and strategic partnerships with African Development Bank-backed investors provide a cushion. However, delays or cost overruns—already flagged by the U.S. Ex-Im Bank—could strain these resources.

Human Rights and Environmental Crosshairs

The project's reputation is under fire. Ongoing investigations into alleged human rights abuses by Mozambican security forces during the 2021 attacks—initiated by TotalEnergies itself—raise governance red flags. Meanwhile, environmental groups label the project a “carbon bomb,” citing its 10 million tonnes/year CO₂ emissions.

TotalEnergies' response? A mix of greenwashing and genuine adaptation. The company has pledged to offset emissions via carbon capture projects and emphasized the LNG's lower carbon profile compared to coal. Yet, these efforts may not placate activists or international lenders. Investors should monitor how Mozambique's government addresses accountability and how TotalEnergies mitigates reputational damage.

Investment Thesis: A Calculated Gamble

Why Invest?
- Long-Term LNG Demand Resilience: LNG remains a bridge fuel in the energy transition, with Asia's growth markets insatiable.
- TotalEnergies' Risk Mitigation: The firm's diversified portfolio (renewables, refining, petrochemicals) buffers LNG project risks.
- Geopolitical Leverage: A successful project could solidify TotalEnergies' influence in Africa's energy landscape, positioning it to dominate future gas discoveries.

Why Proceed with Caution?
- Security Uncertainty: Insurgent tactics could evolve, and Mozambique's military capacity is overstretched.
- Financing Hurdles: Unresolved issues with export credit agencies (e.g., UK and Dutch approvals pending) could delay cash flows.
- Climate Backlash: Regulatory or activist pressure could force stranded assets.

Investment Strategy

For investors, TotalEnergies offers a leveraged play on LNG demand but demands a selective approach:
1. Time the Entry: Wait for clarity on final financing (Q4 2025) and a sustained security trend (three consecutive quarters without major attacks).
2. Monitor ESG Risks: Track progress on human rights investigations and carbon offset commitments.
3. Position for Volatility: Use options or hedging to limit downside exposure while capitalizing on upside from LNG price spikes.

Final Verdict

The Mozambique LNG project is TotalEnergies' most ambitious African venture in decades—a gamble that could either cement its energy dominance or become a costly distraction. While the risks are acute, the strategic payoff for global LNG supply diversification is too significant to ignore. Investors should proceed with a “wait-and-see” stance, prioritizing long-term exposure over short-term volatility. In a world hungry for energy resilience, TotalEnergies' bet on Mozambique could yet prove a masterstroke—if the company can keep the militants at bay.

Invest wisely. Proceed with eyes wide open.