The US Export-Import Bank sanctioned a $5bn loan to support TotalEnergies’ Mozambique LNG project, reviving a $20bn venture stalled by security issues. TotalEnergies anticipates further credit agency support. The project, containing significant gas reserves, has faced insurgency-related disruptions but is now preparing to resume construction amid environmental and human rights concerns from critics.
The US Export-Import Bank has approved a $5 billion loan to facilitate the Mozambique LNG project led by TotalEnergies, which is a significant step towards reviving the $20 billion endeavor. This loan follows a prior commitment of $4.7 billion made during President Donald Trump’s administration, which was reassessed after construction was suspended in 2021 due to security issues in the Cabo Delgado province.
TotalEnergies CEO Patrick Pouyanne expressed optimism about the US support, noting that additional backing from other credit agencies was expected. The project, on hold since 2021 due to a force majeure declaration, is currently awaiting loan reapproval from UK and Dutch export credit agencies, with Mozambique’s Minister for Energy, Estevao Pale, expressing confidence in their renewed support.
The Mozambique LNG initiative began in 2010 with the discovery of substantial natural gas reserves off the northern coast, estimated at around 65 trillion cubic feet (tcf) of recoverable gas. It involves the construction of two liquefaction units, with an initial capacity of 13 million tonnes per annum (mtpa), with potential expansion to 43 mtpa.
Insurgency-related security concerns, particularly those linked to the Islamic State, previously disrupted the project’s progress. However, recent reports from Mitsui, a partner firm, suggest that improved security conditions are paving the way for final preparations to resume construction following contract negotiations.
Despite these positive developments, environmental advocates have raised concerns about the project’s risks. Daniel Ribiero, technical coordinator for Friends of the Earth Mozambique, questioned the sensibility of continued support given the associated human rights violations and environmental impacts, stating that such factors should deter most prudent investors.
The recent approval of a $5 billion loan by the US Export-Import Bank marks a pivotal advancement in the Mozambique LNG project after a lengthy hiatus due to security concerns. The initiative, which has significant gas reserve potential, is now positioned for renewed momentum with anticipated support from international credit agencies. Nonetheless, the project faces scrutiny regarding environmental and human rights implications, urging a balanced consideration of economic benefits against potential risks.
Original Source: www.offshore-technology.com
