French energy giant TotalEnergies has announced that it has again postponed its long-planned order for 17 LNG carriers for its liquefied natural gas (LNG) project due to regional security concerns. To date, the order, worth 6 trillion won (about $4.52 billion), has been delayed six times.
As previously reported, TotalEnergies was scheduled to place shipbuilding orders at the end of January 2023 with two South Korean shipyards through shipowners. Among them, nine units were to be built by Hyundai Samho Heavy Industries, with Japanese shipowners MOL (five) and Kawasaki Kisen Kaisha (and four) acting as the shipowners; Samsung Heavy Industries was to take on the other eight units, with Nippon Yusen (four) and Greece’s Maran Gas Maritime (four) acting as the shipowners. However, with the delay of the project, the order has been postponed to July 2023, and the delivery dates will be pushed back to 2028 and 2029, whereas the initial delivery date was set for 2023.
Nevertheless, the delay in the order will likely free up the 2027 delivery date for other LNG projects.
It is understood that Hyundai Samho Heavy Industries and Samsung Heavy Industries signed a Letter of Intent (LOI) for construction with TotalEnergies in 2020. The original plan was to sign the final construction contract in May 2021, but due to the deteriorating security situation in Mozambique, TotalEnergies declared that the order was postponed due to force majeure factors. 2022, TotalEnergies and its related shipowners negotiated with the two Korean shipyards again for the booking of the LNG carriers, and the order was planned to be confirmed in July 2023, but it still ended up with a postponement. For several years, the two shipyards have been waiting for news of the final order.
In addition, due to several delays, the cost of the order is facing an increase. The initial agreed cost of the series of LNG carriers was US$180 million per unit, while the current cost of the 174,000 m3 LNG carriers has already exceeded US$260 million.
“With the further tightening of global environmental regulations and technological upgrades, the specifications for the newbuildings for the Mozambique LNG project will also change, and without design updates, the operational life of the newbuildings will likely be shortened,” the industry source said.” In this situation, there are rumors that TotalEnergies may launch a re-tender for the Mozambique LNG newbuilding project.
Patrick Pouyanne, CEO of TotalEnergies, said, “The company is gearing up for the lifting of force majeure and is on the verge of concluding a new agreement with the contractors of the the LNG project in the hope of resuming construction of the LNG project by the middle of this year.”
The Mozambique LNG project began in 2010 when a large discovery of natural gas was made off the northern coast of Mozambique, with proven reserves alone amounting to 150 trillion cubic feet. The project, with a total investment of $20 billion, received its final investment decision (FID) in 2019. TotalEnergies will implement two projects with an expanded capacity of up to 43 million tons per annum (MTPA).