- The U.S. Export-Import Bank, under the new Trump administration, has re-approved a $4.7billion loan for a mega liquified natural gas (LNG) project in Mozambique led by TotalEnergies which was placed under force majeure after terror attacks in the region in April 2021. Read more
- 40% of the contracts have been awarded to US companies for plant construction and extraction.
- Loan approvals are still pending from export credit agencies in the UK and the Netherlands.
Patrick Pouyanné, CEO of TotalEnergies, recently announced ‘progress on the ground’ in the fight against terrorism, which in 2021 led TotalEnergies to suspend investment in Cabo Delgado and underlined the ‘alliance’ that Mozambique has with Rwanda, which ensures security in the area where the project is located, on the Afungi peninsula. He confirmed that almost 80% of the US$14 billion needed for the mega gas project in Cabo Delgado is guaranteed and USA was expected to re-join the project.
In December last year, Japan’s Mitsui announced that it was collaborating with TotalEnergies and the Mozambique government to finalise plans for restarting construction of the $20 billion Mozambique LNG project.
“We are working closely with the operator Total and the Mozambique government to ensure security and finalise preparations for resuming construction,” Hori told investors, adding the security situation in the area is showing signs of improvement.
Highlighting the project’s strong competitiveness, high-quality gas, and substantial reserves, he said that the Japanese trading company will move forward while carefully managing local risks.
Related news: Investors in Mozambique do not understand the local political context – Mozambique’s deadly protests: how the country got here
Earlier this year members of the Fair Finance Coalition Southern Africa (FFCSA) launched a case study titled “South African Public Financing of the Mozambique Liquid Natural Gas Project”, which sheds light on the public financing behind TotalEnergies’ Mozambique Liquefied Natural Gas (LNG) Project. Undertaken between May and September 2023, the case study delves into the complexities and consequences of the LNG gas project in northern Mozambique, emphasising its environmental, social, and economic impacts. The case study findings can be accessed here.
The case study examines the TotalEnergies Mozambique LNG Project, halted in early 2021 due to regional violence but slated for a $20 billion restart after assurances from Mozambique’s President, Filipe Nyusi, in April 2023. Despite the suspension, this venture has already triggered a multitude of negative socio-economic and environmental consequences in areas close to the northern gas fields. These impacts are expected to be exacerbated by the greenhouse gas emissions released by the Project’s activities.
Of major concern to the FFCSA are the various South African state-owned public finance institutions, including the Industrial Development Corporation (IDC), the Development Bank of Southern Africa (DBSA), and the Export Credit Insurance Corporation of South Africa (ECIC), who have collectively contributed over $1.2 billion to the Project. Mandated to invest in sustainable development in Southern Africa, these institutions face scrutiny for their financial involvement in socially and environmentally harmful projects, like the Mozambique LNG Project.
Author: Bryan Groenendaal
