TotalEnergies SE is awaiting a critical decision regarding a $4.7 billion loan from the US Export-Import Bank for its $20 billion Mozambique LNG project. The financing is essential for resuming operations halted due to security issues. As the project faces challenges, the company remains optimistic about securing necessary approvals and reviving the regional economy.
TotalEnergies SE’s $20 billion liquefied natural gas facility in Mozambique is nearing a critical financing decision from the US Export-Import Bank. This decision is rooted in the context of the project, which has experienced a four-year hiatus due to security challenges posed by militant activities in the region. The original approval for the $4.7 billion loan was granted in 2019 during the Trump administration, necessitating fresh endorsements after the prolonged delay.
Recent appointments made by President Trump to the bank indicate a renewed focus on US energy dominance and support for employment within the oil and gas sector. The president has designated senior officials to the board, ensuring a quorum and named Bryce McFerran as the acting chief banking officer, adding a layer of credibility and direction to the bank’s operations.
TotalEnergies’ Chief Executive Officer Patrick Pouyanne commented on the expected approval, suggesting that the primary action required is to amend the existing contract to reflect a new project completion timeline of 2030. This adjustment aims to address the previous delays, highlighting the refunctionalization of the US Exim under the current administration’s leadership.
The unlocking of this vital funding through Exim would be a significant milestone for TotalEnergies, which has already invested billions in the Mozambique site. The project is crucial for revitalizing the economy of Mozambique, which has been anticipating substantial economic benefits from the endeavor. Pending approvals from export credit agencies in the UK and the Netherlands remain a hurdle.
An Exim spokesperson noted that the newly established board quorum facilitates continued operational effectiveness and the advancement of strategic banking objectives. The bank is currently reviewing proposed modifications to the Mozambique LNG financing arrangements to adapt to the evolving economic landscape.
Previous attempts by TotalEnergies to secure renewed loan approvals under the Biden administration were unsuccessful, prompting the company to engage in lobbying efforts. Despite these setbacks, Pouyanne expressed confidence in securing necessary approvals, noting a significant proportion of contracts have been awarded to US companies, emphasizing the project’s alignment with US economic interests.
To ensure project resumption, it is imperative to guarantee the safety of workers returning to the site, particularly after the four-year period of force majeure. TotalEnergies has encountered setbacks, including the cancellation of a supply contract, as preparations to reestablish operations continue to face challenges. However, efforts to construct temporary accommodations for workers have been initiated, although recent work has been halted.
In conclusion, TotalEnergies is on the cusp of a decisive moment with the US Export-Import Bank, which could revitalize the $20 billion Mozambique LNG project. With renewed lending approvals necessary after a lengthy delay, the company has positioned itself for a transformative step for both its future and the economic prospects of Mozambique. Despite hurdles faced in previous administrations, the project is viewed with optimism, contingent upon safety assurances and operational readiness.
Original Source: financialpost.com
