Mozambique: New Petroleum Law Redefines Force Majeure State Costs

• Mozambique has revised its petroleum law to strengthen force majeure provisions.
• These changes were prompted by TotalEnergies' 2021 force majeure declaration on the Mozambique LNG project due to Cabo Delgado insecurity.
• The new rules mandate that each party bears its own costs during a force majeure event.
• After a year of project suspension, the government and other parties will reassess the situation.
• This legal shift aims to shield the state from significant financial burdens during project disruptions.

The new legal framework explicitly mandates that each party involved in a force majeure event must individually cover its own expenses, a significant shift in the allocation of financial burdens during project disruptions.

The Mozambican government has recently implemented significant amendments to its legal framework governing force majeure, particularly within the petroleum sector. These revisions were directly prompted by what officials described as a "bitter" experience stemming from the suspension of a major energy project. The aim of these changes is to redefine the allocation of financial responsibilities when unforeseen circumstances halt operations.

The catalyst for these legislative adjustments was the declaration of force majeure by TotalEnergies in 2021. This declaration impacted the Mozambique LNG project, a critical undertaking for the nation's economic development. The energy giant cited escalating insecurity in the Cabo Delgado region as the primary reason for suspending its operations. While this led to a prolonged halt, TotalEnergies lifted the force majeure on November 7, 2025, and the project activities fully restarted on January 29, 2026, after government approval of a revised budget and schedule.

Under the newly enacted Mozambique Petroleum Law, specific provisions now dictate how costs are to be managed during a force majeure event. A key stipulation is that each party involved in such an event is now responsible for bearing its own costs. This represents a notable shift in the risk allocation model, potentially shielding the state from financial burdens previously shared or disproportionately borne by the host nation during project suspensions.

Furthermore, the updated legal text introduces a critical timeline for project suspensions. It specifies that after a period of one year of suspension, the government and other involved entities will need to reassess the situation. This clause suggests a mechanism for re-evaluating the project's viability or the terms of engagement following an extended period of inactivity due to force majeure, thereby having significantly impacted the long-term contractual obligations and potential state costs associated with the Mozambique LNG project and similar ventures.

The government's move to strengthen these legal provisions reflects a strategic effort to mitigate future financial exposure for the state in large-scale energy projects. By ensuring that each party covers its own costs during force majeure, Mozambique aims to establish a clearer and more equitable distribution of financial risk, particularly in the face of challenges like regional insecurity that can severely disrupt operations and lead to substantial state costs.

This legislative update creates a significant precedent for Mozambique oil and gas contract risk allocation. It signals to international energy companies operating or considering investment in Mozambique that the legal landscape regarding force majeure provisions has evolved, with a clear emphasis on individual party responsibility. The experience with TotalEnergies and the Mozambique LNG project's force majeure impact due to Cabo Delgado insecurity has evidently reshaped the government's approach to contractual stability and financial safeguarding.

Lawyers advising energy companies operating or planning to operate in Mozambique must immediately review their force majeure clauses in existing and prospective contracts to understand the new cost allocation and potential state shielding, particularly after a year of suspension.

Source: Original reporting via AIM report