- TotalEnergies has moved to clarify the financial and political situation surrounding its Mozambique LNG project after the withdrawal of UK and Dutch export-credit backing added fresh uncertainty to the long-delayed development.
The company said the project completed a US$15.4 billion financing package in 2020 with around 30 lenders, including export credit agencies from the UK and the Netherlands. Following an extended force majeure period triggered by the Islamist insurgency in Cabo Delgado, TotalEnergies renegotiated the financing to reflect a revised project schedule. After force majeure was lifted, the consortium elected to proceed without UK Export Finance (UKEF) and the Dutch agency Atradius, noting that neither had reconfirmed their commitments. The project partners will now inject additional equity to replace the two agencies’ combined contribution, which amounted to roughly 10 per cent of external financing. TotalEnergies thanked the lenders representing the remaining 90 per cent who have confirmed continued support.
The decision by the UK government to withdraw its US$1.15 billion backing was announced by business secretary Peter Kyle, who stated that the project’s risk profile had “increased significantly” since UKEF first approved support in 2020, shortly before the UK banned direct public financing for overseas fossil-fuel ventures. Kyle said officials had reviewed amendments requested as part of the project’s restart preparations and concluded that the interests of taxpayers were “best served” by ending participation. UKEF will reimburse the project for any premiums paid, although details have not been disclosed. TotalEnergies declined to comment on the UK announcement.
In parallel, TotalEnergies criticised two reports commissioned by the Dutch finance ministry from research groups Clingendael and Pangea Risk, which assessed security and human rights conditions in Cabo Delgado. The company said it regretted that the advisors did not conduct on-the-ground investigations and relied instead on third-party information. It reiterated earlier clarifications regarding allegations of abuses by Mozambican security forces and directed stakeholders to its detailed public responses.
The funding shake-up comes as the Mozambican government steps up pressure on TotalEnergies to resume operations at the Afungi site. A cabinet resolution dated 19 November orders the company to provide by 19 December a detailed timetable for the “immediate implementation” of work, and insists that the restart should not depend on completing an audit of costs incurred during the force majeure period. The government’s demand follows a resurgence in militant activity, including a recent attack in Mocímboa da Praia in which Islamic State-aligned fighters killed dozens of civilians. Although security improved after Rwandan troops were deployed in 2021, attacks have increased again since September.
Maputo will appoint independent auditors to review the US$4.5 billion in additional costs claimed by TotalEnergies during the suspension. The findings must be validated by the government, with the operator given the opportunity to respond. Authorities also intend to extend the project’s original 30-year production period, approved in 2018, to compensate for the multi-year delay. TotalEnergies has separately sought a concession extension of more than a decade, which the government has been reluctant to grant, arguing that the shutdown stemmed primarily from the company’s own decision to halt work amid growing violence.
The Mozambique LNG development remains central to the country’s ambition to become a major exporter to Europe and Asia. ExxonMobil and Eni have lifted force majeure on their neighbouring Rovuma LNG scheme and hope to reach a final investment decision next year, while Eni’s Coral South floating LNG facility has been producing since 2022 and is due to double capacity when Coral North is commissioned in 2028. In contrast to the more cautious stance of European export-credit agencies, the US Export-Import Bank approved nearly US$5 billion in support for the TotalEnergies project earlier this year.
Author: Bryan Groenendaal
