U.S. Export-Import Bank Approves $5 Billion Loan for TotalEnergies Mozambique LNG Project

The U.S. Export-Import Bank approved a nearly $5 billion loan to TotalEnergies for a delayed LNG project in Mozambique. The project was previously halted due to violence in the Cabo Delgado region. TotalEnergies is seeking further support from British and Dutch credit agencies. While security conditions have improved, environmental groups express concern regarding human rights and economic risks.

The U.S. Export-Import Bank has sanctioned an almost $5 billion loan aimed at reviving a long-stalled liquefied natural gas (LNG) project in Mozambique, managed by TotalEnergies. Previously, a loan of $4.7 billion for the $20 billion development was authorized during the Trump administration, yet it required re-approval due to the project’s suspension since 2021 following violent unrest in Cabo Delgado.

TotalEnergies’ CEO, Patrick Pouyanne, expressed his optimism about receiving U.S. financing approval soon, with expectations for support from additional credit agencies later. The company has awaited approval from American, British, and Dutch export credit agencies to lift a force majeure declared due to ongoing security concerns since 2021. Mozambique’s Minister of Energy, Estevao Pale, anticipates similar reaffirmation from UK and Dutch partners.

Initially, the Mozambique LNG project, with TotalEnergies holding a 26.5% operational stake, aimed to establish Mozambique as a central LNG producer; however, an insurgency tied to Islamic State militants has stalled progress. Recently, security improvements have been noted, with Mitsui, a partner in the project, indicating that preparations for construction resumption are underway following contract negotiations.

Despite these developments, various environmental organizations have raised concerns regarding the associated security risks, suggesting that these factors warrant reconsideration of support for the project. “The human rights violations, armed conflict, environmental impacts, and risky economic projections of the Mozambique LNG project should have kept most sensible investors away,” stated Daniel Ribiero, the technical coordinator of Friends of the Earth Mozambique.

The recent approval of a $5 billion loan by the U.S. Export-Import Bank marks a significant step toward reviving the Mozambique LNG project by TotalEnergies. While the financing aims to bolster Mozambique’s emergence as an LNG producer, security concerns and environmental risks continue to provoke criticism from various advocacy groups. As the project proceeds, the balance between economic development and social responsibility remains a pivotal topic of discussion.

Original Source: www.tradingview.com