The US Export-Import Bank approved a $4.7 billion loan for TotalEnergies’ Mozambique LNG project, the largest financing piece for the initiative. Construction halted due to militant threats, necessitating safety measures and financial backing for a restart. The project faces criticism from environmentalists amidst a backdrop of reduced support for foreign health programs.
The US Export-Import Bank recently approved a $4.7 billion loan, representing the largest portion of financing for TotalEnergies SE’s Mozambique LNG project. This decision follows a four-year halt in construction due to militant attacks in the region, necessitating a focus on workers’ safety and renewed financial commitments from export credit agencies to re-initiate the project.
The Financial Times reported that the bank’s board voted in favor of this financing, as confirmed by Mozambique’s Energy Minister, Estevão Pale. The approval comes during a period marked by several appointments made by the Trump administration to the bank. TotalEnergies had sought renewed loan approval prior to the Biden administration’s conclusion in January but was unsuccessful.
Recently, Mozambique’s eurobonds due in 2031 saw significant gains, rising as much as 3% to 82 cents on the dollar, marking its largest daily increase since January 17. However, this financing has faced criticism from environmental groups voicing concerns over ongoing conflicts affecting the project and the US government’s reduction of health program support abroad.
Kate DeAngelis, economic policy deputy director for Friends of the Earth US, expressed dismay at the decision, stating that while taxpayer-funded foreign aid is being reduced, substantial financial support is granted to the fossil fuel industry. Despite these challenges, TotalEnergies has indicated that over 40% of project contracts have been awarded to US firms, and the local security situation has shown signs of improvement, albeit still precarious.
In summary, the US Export-Import Bank’s approval of a $4.7 billion loan marks a critical step in revitalizing TotalEnergies’ Mozambique LNG project following a prolonged halt due to security concerns. While the financing is substantial, it has attracted significant criticism regarding environmental impacts and foreign aid reductions. Nonetheless, the project continues to show promise with a substantial allocation of contracts to American firms and an improving security landscape.
Original Source: financialpost.com
