TotalEnergies will support the construction of an LNG terminal in Mozambique to increase imports of natural gas.

The French oil company TotalEnergies hopes to approve the construction of a liquefied natural gas import terminal in Mozambique by 2025 for consumers in neighboring South Africa to avoid a potential supply crisis.

The first natural gas could be exported from the Matola terminal by the end of 2027, according to Gigajoule, a partner in the project.

It is the same year that gas extracted from Sasol Ltd.'s fields in Mozambique is due to end for South African companies, which include units of brewer Anheuser-Busch InBev SA/NV and steelmaker ArcelorMittal, fuelling fears of a so-called "gas cliff" in the continent's most industrialized country.

The Matola project, near the Mozambican capital Maputo, will have the capacity to transport 2.5 million tons of LNG a year, TotalEnergies said on Monday in response to questions sent by email.

It could be the first major supplier of liquefied natural gas to South Africa and is independent of the production and export project that TotalEnergies has in Cabo Delgado province, in northeastern Mozambique.

Members of the Industrial Gas Consumers Association of Southern Africa, a pressure group, are ready to sign a commitment by December to buy natural gas from the Matola terminal, as part of an effort to bring the project to fruition. The group is racing against the time needed to build the new infrastructure, said Jaco Human, executive director of (IGUA).

"The risk of not having gas is catastrophic," he said, quoted by Bloomberg.

The IGUA's search for alternative gas sources comes at a time when South Africa is planning to consume more natural gas and reduce its dependence on coal due to its harmful impact on the environment. Although the government is taking steps to build this infrastructure, current gas customers will not be able to afford delays.

The final investment decision should be made in the second quarter of next year, according to Gigajoule's managing director, Jurie Swart. The import terminal will be connected to an existing pipeline that transports Sasol's gas from Mozambique to South Africa. In 2019, Gigajoule estimates the cost of the project at 3.2 billion dollars, including a gas-fired power plant.

TotalEnergies said it is engaging "all relevant stakeholders", including Sasol and South African state-owned energy company Eskom Holdings SOC Ltd. The companies did not respond to emailed requests for comment.

Interested gas buyers held discussions on October 4 about the contract and prices, as well as contacts with Sasol and financial institutions, according to Human. (AIM/Bloomberg)