Afungi Liquified Natural Gas Camp, near Palma, Mozambique. French energy company Total has shut down operations following an extremist attack in the area. Reuters.
Afungi Liquified Natural Gas Camp, near Palma, Mozambique. French energy company Total has shut down operations following an extremist attack in the area. Reuters.
Afungi Liquified Natural Gas Camp, near Palma, Mozambique. French energy company Total has shut down operations following an extremist attack in the area. Reuters.
Afungi Liquified Natural Gas Camp, near Palma, Mozambique. French energy company Total has shut down operations following an extremist attack in the area. Reuters.

France's Total shuts gas plant after Mozambique attacks, report says


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French energy company Total has shut its operations and withdrawn all staff from a site in northern Mozambique, following last week's deadly terror attack in the area, security sources said on Friday.

"Total has gone," a security source in Maputo told AFP, adding that "it will be hard to persuade them to return" this year.

A military source said: "All the facilities are abandoned.

"Total made a decision to evacuate all of its staff" after drone surveillance showed insurgents were in areas "very close" to the gas plant in Afungi.

Another source confirmed there were reports that extremists were not far from the site.

Afungi peninsula is only 10 kilometres from the town of Palma, which came under attack more than a week ago, resulting in the deaths of dozens of people, including at least two expatriate workers.

The brazen assault on March 24 was the latest in a string of more than 830 organised raids by extremists over the past three years, during which more than 2,600 people have died.

Total had already removed some staff and suspended construction work in late December following a series of violent attacks near its compound.

But last week's raid is seen as the biggest escalation of the insurgency ravaging Cabo Delgado province since 2017.

Many civilian survivors fled their homes, flocking towards the heavily secured gas plant.

An estimated 15,000 people have gathered near the site, while more are still arriving and "security is compromised", said another source.

The humanitarian "situation continues to deteriorate," added the source

Total's departure came as Afungi army commander Chongo Vidigal declared on Thursday the gas project was "protected".

"We are currently in the special area in Afungi and never had a terrorism threat," he said.

Total did not immediately respond to requests for comment.

Most communications were cut after the Palma onslaught began.

Thousands of troops have been deployed to Cabo Delgado, but Mozambique's ability to fight the insurgency has long been questioned, with analysts pointing to poor training and lack of equipment.

Government security forces are bolstered by a South African private military company, Dyck Advisory Group.

Total and its partners planned to invest $20 billion in the project, the largest amount ever for a project in Africa.

In February, Total chief executive Patrick Pouyanne insisted that the project, which the company inherited from US energy firm Anadarko, was still on track to begin operations in 2024.

He said this having reached agreement with Mozambican President Filipe Nyusi to set up a 25-kilometre radius secure zone around the site.

But last week, the extremists attacked, reportedly beheading residents and ransacking buildings in the latest rampage.

Hundreds, including many foreign workers, have been evacuated by air and sea, while thousands of locals walked to safety.

The UN said it has recorded at least 9,100 people internally displaced by the latest violence.

The violence has uprooted about 700,000 people from their homes since October 2017.

Extremists in Cabo Delgado have wreaked havoc across the northern  province with the aim of establishing a caliphate.

The insurgents are affiliated to ISIS, which claimed responsibility for the Palma attack.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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