Resurgence of the Mozambique LNG Project: $5 Billion Loan Secured

The US Export-Import Bank has approved a $5 billion loan for the Mozambique LNG project led by TotalEnergies, following a previous $4.7 billion commitment. The project has been stalled since 2021 due to security issues but is poised for revival amid improved conditions. Environmental groups express concern regarding risks associated with the initiative.

The Mozambique LNG project has received a significant boost with a $5 billion loan sanctioned by the US Export-Import Bank, facilitating the phase to resume operations on the $20 billion initiative led by TotalEnergies. This funding follows a prior commitment of $4.7 billion made during President Donald Trump’s administration, which was reassessed after construction was halted in 2021 due to security concerns in Cabo Delgado province, where violent disruptions occurred near the site.

CEO of TotalEnergies, Patrick Pouyanne, expressed optimism about this outcome and anticipated further endorsements from additional credit agencies to support the project’s revival. Since being put on hold due to force majeure, the project is also awaiting loan reapproval from UK and Dutch export credit agencies, with Mozambique’s Minister for Energy, Estevao Pale, expressing confidence in their continued support.

The Mozambique LNG initiative began in 2010 following the discovery of substantial natural gas reserves off the northern coast. The project estimates approximately 65 trillion cubic feet of recoverable natural gas and plans to build two liquefaction units, initially with a capacity of 13 million tonnes per annum, with the potential to expand to 43 million tonnes per annum.

Construction was disrupted mainly due to an insurgency linked to the Islamic State, which raised security concerns. However, recent reports indicate improved security, and Mitsui, one of the partners in the project, has noted that preparations to resume construction are underway following negotiations with contractors.

In contrast, environmental groups have raised objections to the project due to the ongoing security risks. Daniel Ribiero, a technical coordinator from Friends of the Earth Mozambique, articulated concerns, stating that the project’s human rights violations, armed conflict implications, environmental impact, and questionable economic forecasts should deter responsible investors.

In conclusion, the Mozambique LNG project is on the brink of being revitalized, supported by a significant loan from the US Export-Import Bank. With improved security conditions and anticipated endorsements from additional financial institutions, the hopes for resuming construction appear promising. Nevertheless, opposition from environmental groups underscores the need for careful consideration of the broader implications of the project, especially concerning human rights and environmental sustainability.

Original Source: www.offshore-technology.com