The U.S. Export-Import Bank has approved a $5 billion loan for TotalEnergies’ Mozambique LNG project, which had been delayed due to regional violence. This approval paves the way for restarting construction, with expectations for support from other international credit agencies. Critics, however, raise concerns about the associated human rights and environmental implications.
The U.S. Export-Import Bank has sanctioned a nearly $5 billion loan for a delayed liquefied natural gas (LNG) project in Mozambique, facilitating a crucial step towards the project’s revival, which is being developed by the French oil enterprise TotalEnergies. The project, initially approved under a $4.7 billion loan during President Donald Trump’s administration, stalled in 2021 due to escalating violence in the Cabo Delgado region, necessitating re-approval before any funds could be disbursed.
TotalEnergies CEO, Patrick Pouyanne, expressed confidence last month regarding the U.S. financing approval, with expectations that other international credit agencies would follow suit soon thereafter. The firm awaited re-approvals from export credit agencies in the United States, United Kingdom, and the Netherlands before lifting a force majeure declaration that had been active since 2021 due to project disruptions.
Estevao Pale, Mozambique’s energy minister, expressed optimism that the UK and Dutch agencies would reaffirm their support. The Mozambique LNG project, in which TotalEnergies holds a 26.5% operating stake, was intended to position Mozambique as a significant LNG producer, but was impeded by an insurgency linked to Islamic State militants. Security in the region has since improved, with partner Mitsui announcing in December that final preparations are being made to resume construction after renegotiations with contractors.
Environmental advocates argue that the security concerns surrounding the project should have discouraged financial backing. Daniel Ribiero, technical coordinator of Friends of the Earth Mozambique, stated, “The human rights violations, armed conflict, environmental impacts and risky economic projections of the Mozambique LNG project should have kept most sensible investors away.”
The recent approval of a $5 billion loan by the U.S. Export-Import Bank marks a pivotal moment for the delayed Mozambique LNG project, offering hope for its revival despite prior disruptions caused by regional violence. TotalEnergies anticipates further financial support from international agencies, while concerns regarding human rights and environmental risks persist among critics.
Original Source: www.tradingview.com
