UK contributes €1.3B

The British government will contribute up to £1.15 billion (€1.3 billion) to the liquefied natural gas (LNG) project in northern Mozambique, the under-secretary of state for international trade confirmed on Tuesday. Graham Stuart said in a written response to members of parliament that the UK Export Finance agency (UKEF) has agreed to support UK companies with £300 million in direct loans (€333 million) and £850 million (€944 million) in guarantees to commercial banks providing loans.

 

“The UKEF will support some UK companies, including small and medium enterprises and over 2,000 jobs in the UK,” he said, in the information provided to parliament on Monday. The project, he said, will generate significant revenues for Mozambique and will be transformative for the country’s economic and social development.  The French oil company Total said on Friday that it had concluded the funding of $14,900 million (€13,000 million) for the LNG project in northern Mozambique. “The financing for the project is $14.9 billion, the largest ever registered in Africa, and includes direct and covered loans from eight export credit agencies, 19 commercial banking institutions and a loan from the African Development Bank,” the company said in a statement. The project, located in the Rovuma basin on the Afungi peninsula of Cabo Delgado province in north-eastern Mozambique, will be financed through a combination of equity and loans. The project involves the development of offshore gas production units linked to an onshore gas reception and natural gas liquefaction unit for domestic consumption and export. In another response, Stuart said that the UK support was made after an environmental, social and human rights report, meeting the requirements, but the environmental organisation Friends of the Earth criticised the funding of a project based on fossil fuels.

“As hosts of the next global climate summit, COP26, the UK must focus on ambitious action leading to real emissions cuts both at home and abroad, not funding climate-wrecking projects in a country already struggling with the impacts of climate breakdown.” Friends of the Earth criticised on Twitter.

The French oil company maintains the year 2024 as the deadline for the first delivery of gas and is expected to reach full production (13.12 million tonnes/year) in 2025. The consortium has closed sales contracts mainly for Asian markets (China, Japan, India, Thailand, and Indonesia), but also European markets, through Electricity France, Shell and British Central. Total leads the Area 1 consortium with 26.5%, alongside the Japanese Mitsui (20%) and the Mozambican state oil company ENH (15%), with other participations coming from the Indian ONGC Videsh (10%) and its subsidiary Beas (10%), Bharat Petro Resources (10%), and the Thai PTTEP (8.5%).