Capital Calls: Total pulls legal ripcord in Mozambique

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A Dyck Advisory Group helicopter lands in Palma, Mozambique in this picture taken between March 24 and March 27, 2021 and obtained by Reuters on March 30, 2021. Dyck Advisory Group/Handout via REUTERS

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LONDON, April 26 (Reuters Breakingviews) - Concise insights on global finance.


MAN-MADE DISASTER. Force majeure is typically reserved for acts of God or other unforeseen events. For Total (TOTF.PA) in Mozambique, the reasons are sadly predictable. The French energy giant on Monday invoked the legal clause, which frees it from its contractual obligations, over deteriorating security in the north, where it is building a $20 billion liquified natural gas plant. Islamic State-linked militants overran the nearby town of Palma last month.

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Total paid $3.9 billion for a 26.5% stake in the project in 2019, when the Islamist insurgency was in its infancy. So far, it has probably spent only a small part of its $14.9 billion of financing. And with force majeure in place, it no longer has to pay contractors. But the declaration suggests the French group now fears a long delay until authorities reassert control. Meanwhile gas investment is under growing scrutiny from investors, and faces competition from renewables. The longer the project stays on ice, the less likely Total will recoup its outlay. (By Ed Cropley)

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