US Exim Approves $4.7 Billion Loan for Total Mozambique LNG Project

The US Export-Import Bank approved a $4.7 billion loan for TotalEnergies’ Mozambique LNG project, the largest financing component. The project was halted due to security issues, and its revival is crucial. Environmental groups criticize the funding amid cuts to foreign aid. TotalEnergies affirms substantial contracts have been awarded to US firms, despite lingering security concerns.

The US Export-Import Bank has recently sanctioned a substantial loan amounting to $4.7 billion, representing the principal component of financing for TotalEnergies SE’s Mozambique liquefied natural gas (LNG) project. This significant funding decision was made public by sources familiar with the situation.

TotalEnergies’ LNG development was suspended four years ago due to militant threats in the area, necessitating secure conditions for workers’ return and a revival of promised financial support from export credit agencies to restart operations.

The approval of this financing comes on the heels of recent appointments to the bank by the Trump administration, following prior unsuccessful attempts by TotalEnergies to secure the loan during the Biden administration’s tenure. As a consequence of the financing news, Mozambique’s eurobonds due in 2031 experienced a notable increase.

Environmental advocates have expressed concerns regarding the impact of funding this project, especially in light of the current reduction in foreign health aid by the US government. Critics argue that the funding prioritizes fossil fuel interests over humanitarian assistance.

Despite security challenges that remain, TotalEnergies has reported that over 40% of project contracts have been awarded to American firms, indicating a significant potential economic benefit for the US. Improved security conditions have been noted, though the situation cannot be deemed perfect.

In conclusion, the approval of the $4.7 billion loan by the US Export-Import Bank marks a critical step towards the revival of TotalEnergies’ Mozambique LNG project. While this funding could stimulate economic activity and support American contractors, it has drawn scrutiny from environmental groups concerned about the prioritization of fossil fuels amidst ongoing humanitarian needs. Ultimately, the situation reflects broader themes of economic development versus environmental and social responsibility in international finance.

Original Source: financialpost.com