U.S. Approves $5 Billion Loan for TotalEnergies’ Mozambique LNG Project
The U.S. Export-Import Bank has approved a nearly $5 billion loan for TotalEnergies’ LNG project in Mozambique, which had been stalled due to violence since 2021. While there is optimism about resuming the project, environmental concerns highlight significant risks involved. The project aims to position Mozambique as a major LNG producer, but ethical considerations remain contentious.
The U.S. Export-Import Bank has approved a significant loan of nearly $5 billion for the long-awaited liquefied natural gas (LNG) project in Mozambique, which is led by France’s TotalEnergies. This approval is a crucial step towards resuming a project that was previously on pause due to violence in the Cabo Delgado region, which halted construction in 2021.
Initially, the Export-Import Bank granted a $4.7 billion loan for the $20 billion Mozambique LNG project during President Donald Trump’s administration. However, this approval had to be revisited following the project’s suspension due to security threats from insurgents tied to the Islamic State.
TotalEnergies’ CEO, Patrick Pouyanne, had expressed optimism about receiving U.S. financing soon, anticipating that support from other international credit agencies would follow. The company has been awaiting re-approvals not only from the United States but also from the UK and Dutch agencies, which are necessary to lift the force majeure status on the project.
Mozambique’s energy minister, Estevao Pale, conveyed confidence that the UK and Netherlands would reaffirm their financial backing. The Mozambique LNG project, in which TotalEnergies holds a 26.5% stake, aims to position Mozambique as a substantial LNG producer. However, activities had been stalled due to a violent insurgency, although security has improved, allowing for construction preparations to begin.
In contrast, environmental organizations have voiced concerns about the project’s risks. Daniel Ribiero from Friends of the Earth Mozambique criticized the support for the Mozambique LNG project, citing significant human rights violations, environmental concerns, and the volatility of economic forecasts associated with it.
Despite improvement in security, the conflict and environmental implications of the project raise critical ethical questions that many believe should discourage investment.
The approval of a $5 billion loan by the U.S. Export-Import Bank marks a pivotal development in resuming the Mozambique LNG project led by TotalEnergies. While this financing is poised to revitalize the project after delays due to security issues, concerns raised by environmental activists regarding human rights and ecological ramifications underscore the intricate balance between development and sustainability. As Mozambique seeks to enhance its status as an LNG producer, it must address these pressing environmental and ethical considerations.
Original Source: www.tradingview.com
