Middle East Conflict Halts 15% of Output; Mozambique LNG Restarts Under $20B Plan
Middle East conflict closed the Strait of Hormuz, disrupting 20% of global oil and LNG exports and halting 15% of TotalEnergies' production. TotalEnergies restarted Mozambique LNG with over 6,000 workers, set a $20 billion budget and targets first LNG by 2029 while maintaining a 40% cash payout ratio for 2026.
1. Impact of Middle East Disruptions
The closure of the Strait of Hormuz triggered by regional conflict disrupted approximately 20% of global oil and LNG exports. Offshore production shutdowns in Qatar, Iraq and the UAE accounted for around 15% of TotalEnergies' total output, forcing the company to reallocate volumes across its diversified portfolio.
2. Progress on Mozambique LNG
Construction at the Mozambique LNG project resumed with over 6,000 personnel on site, reflecting the company's commitment to diversify supply. The project carries a $20 billion budget, is 42% complete and aims to deliver its first cargo by 2029, bolstering long-term LNG capacity.
3. Cash Return Strategy and EPH Transaction
Early closing of the EPH power deal allows TotalEnergies to capitalize on elevated European electricity prices. The company reaffirmed a cash payout ratio above 40% for 2026, with provisions for increased share buybacks if oil prices remain elevated.
4. LNG Contracts and Investment Acceleration
Heightened energy security concerns have renewed focus on long-term LNG contracts, particularly in Asia, bolstering demand for TotalEnergies’ portfolio. Management is exploring accelerated short-cycle investments in regions like Angola and moving toward a final investment decision on the Papua New Guinea project by year-end.