Lenders to TotalEnergies SE’s Mozambique Liquefied Natural Gas (LNG) project are considering releasing billions of dollars in financing as the company plans to resume construction, three years after development was halted due to attacks by Islamic insurgents.
The planned onshore facility to export major gas discoveries attracted the largest project financing ever seen in Africa. That was before attacks by Islamic State-linked militants near the site in 2021 led Total to evacuate its staff and declare force majeure.
The US Export-Import Bank (Exim), which has committed to most of the 4.7 billion dollars in financing – and other creditors, totaling around 15 billion dollars in debt – are conducting assessments on reactivating the financing, as reported by Bloomberg. TotalEnergies CEO Patrick Pouyanne said last month that the company had made progress with suppliers and contractors towards a mid-year restart. Previously, the target was the end of 2023.
“Exim continues to work with its financial partners and borrowers to carry out due diligence for the Mozambique LNG project in relation to the proposed projects and restart amendments to the financial documents,” the bank said.
The assessment of the possibility of resuming financing coincides with a decision by the Joe Biden administration in January to suspend the approval of new Liquefied Natural Gas export licenses, recognizing that the climate impact of the fossil fuel needs to be reassessed. The US Exim Bank loan for the LNG project was initially granted in 2020, during the administration of former President Donald Trump.
Exim said it seeks to align itself with Biden’s climate agenda while still meeting its statutory requirements, including a prohibition on discrimination based solely on industry, sector or business, and its mission to support US jobs, adding that any changes to its charter require congressional action.
Although Russia’s invasion of Ukraine has led Europe to seek alternative energy sources, increasing interest in future LNG production, projects in African countries remain susceptible to a number of problems, including political instability and construction delays. Mozambique has the additional obstacle of an insurgency that has been subdued by the armed forces, although Islamic fighters continue to carry out sporadic deadly attacks.
A series of attacks since December has marked an upsurge in violence, after national and regional forces last year announced major gains in the six-year conflict, which has left almost 5,000 people dead. The deadliest recent attack took place around 136 kilometers (85 miles) south of the LNG project and subsequent attacks have been much further away.
Since the last outbreak of violence and attacks on civilians in early February, more than 70,000 people have been forcibly displaced in Cabo Delgado, the UN Refugee Agency said in a statement last Friday, March 1.
Atradius Dutch State Business, the Dutch export credit agency based in Amsterdam, which has committed one billion dollars to Mozambique LNG, said that they are also assessing the situation.
