The Export-Import Bank of the United States has reportedly approved a USD 4.7 billion loan for TotalEnergies’ LNG project in Mozambique, enhancing the project’s prospects. However, security risks and political instability present significant obstacles. The successful development of this sector is crucial for Mozambique’s economy and credit profile.
The Export-Import Bank of the United States (EXIM) has reportedly approved a USD 4.7 billion loan for TotalEnergies’ liquefied natural gas (LNG) project in Mozambique. If confirmed, this financing could positively impact the project’s resumption and Mozambique’s economic development, according to Fitch Ratings. However, ongoing insecurity remains a significant risk to the project’s completion.
Mozambique’s Energy Minister, Estevão Pale, stated that EXIM’s board has voted to support the project, although official confirmation is pending. This development aligns with Fitch Ratings’ previous downgrade of Mozambique’s rating to ‘CCC’ in February 2025, suggesting a potential improvement in financing conditions under the new U.S. administration. Reports indicate that other export credit agencies are reevaluating their financial commitments due to political developments in Mozambique.
Fitch Ratings anticipates that construction on the TotalEnergies LNG project may resume by 2025, contingent upon lifting the force majeure that has been in effect since 2021. TotalEnergies indicated in January that the project would not be operational until after 2029, yet a prompt revival could enable production and exports to commence around 2030, significantly bolstering Mozambique’s economic outlook.
The successful advancement of the TotalEnergies project would enhance economic growth, bolstering export earnings and fiscal revenues. Mozambique faces principal repayments of approximately USD 250 million annually on its USD 900 million Eurobond starting in 2028, potentially coinciding with the start of LNG production.
The resumption of TotalEnergies’ project could pave the way for a final investment decision on ExxonMobil’s proposed USD 30 billion LNG project, which would partially be onshore and is expected to have a production capacity of 18 million tonnes per annum (mtpa). In contrast, TotalEnergies’ project has a combined capacity of 12.9 mtpa, with production anticipated beyond 2030.
Eni is launching a second floating facility (Coral North) in Area 4, expected to mirror the 3.7 mtpa capacity of the existing Coral South project, currently the only operational LNG project in Mozambique. Targeting production between 2027-2028, Coral North’s development is independent of TotalEnergies’ efforts.
However, security threats and political instability persist as potential impediments to the TotalEnergies LNG project. The stability of the Rwandan force present since 2021 remains uncertain, as funding from the EU may be influenced by political controversies, such as recent restrictions related to alleged conflicts in the Democratic Republic of the Congo. Further unrest in Mozambique could equally hinder project progress.
The development of the LNG sector is crucial for Mozambique’s medium-term outlook. However, Fitch Ratings emphasizes that more pressing factors will affect the sovereign rating, including government access to financing, fiscal consolidation efforts, and the alleviation of domestic political and social tensions to stabilize economic activities.
In summary, the potential approval of a substantial loan from EXIM for TotalEnergies’ LNG project could significantly enhance Mozambique’s economic prospects. Nevertheless, ongoing security concerns and political instability remain critical challenges that must be addressed. The successful development of the LNG sector is pivotal for the country’s financial health, and its forecast depends on several intersecting variables, including external financing and domestic stability.
Original Source: clubofmozambique.com
