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UPDATE: Total Faces $12 Billion Shortfall as it Continues $20 Billion Mozambique LNG Project

French energy major Total expects a $12 billion revenue shortfall due to the drop in oil prices brought on by the COVID-19 pandemic. The company’s statement comes as it works to move ahead with a $20 billion LNG project in Mozambique.

Company chief executive Patrick Pouyanné said during a recent shareholders’ meeting that the shortfall is a third higher than its previous forecast of a $9 billion shortfall. Total expected the oil price to be around $60/bbl this year, but the current price of around $30/bbl leaves the company with a much bigger shortfall.

The $12 billion shortfall comes just after South Africa’s Rand Merchant Bank (RMB) confirmed that the Mozambique LNG project will receive $15 billion of financing commitments at a signing scheduled for June 2020. RMB’s announcement comes a week after media outlets said the $20 billion project secured the $15 billion in financing.

Bloomberg said the financing deal also involves 20 banks including Standard Bank Group and Société Générale S.A.

Construction on Mozambique LNG was halted in April, but Total is still working with engineering firms on the project. Last month, Total awarded a significant contract to W-Industries for the engineering, manufacturing, integration, automation, and testing of the onshore subsea equipment related to the development of the Golfinho subsea assets.

W-Industries will provide two onshore subsea support equipment modules (OSSEMs) with integrated electrical and instrumentation buildings, a subsea production hydraulic power unit, a MEG-injection system, a methanol-injection system, and an independent chemical-injection skid with a fully integrated local process control and safety system.

Total also awarded a master service agreement to Worley in March.

The project reached final investment decision in June 2019 and comprises approximately 75 Tcf of recoverable natural gas in Offshore area 1. Initial plans are for two trains with scope to expand up to 43 mtpa. First production is expected to be delivered in 2024. 

Other partners in the joint venture include state energy company ENH, Japan’s Mitsui, Thailand’s PTT, India’s ONGC Videsh Ltd., Bharat Petroleum Resources, and Oil India.

The Mozambique LNG project is expected to generate upwards of $40 billion in revenue for the government over its lifespan. 

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