Total Mozambique LNG – completes nearly $16 billion financing
The Mozambique liquefied natural gas project has closed up to $ 16 billion in funding for a number of banks despite a slowdown in energy investment as the corona virus pounds the global economy.
According to the White & Case LLP law firm, which advised the financiers, it is the largest foreign direct investment in Africa to date. The financial closing is scheduled for the end of September.
The African Development Bank will provide $ 400 million in senior loans, and the Japanese International Cooperation Bank has signed a loan agreement of up to $ 3 billion for the North Mozambique program, they said in separate announcements on Thursday.
The amount raised, which includes a loan from the United States’ Export Import Bank, corresponds to the gross domestic product of the African nation. Oil India Ltd., a partner, also confirmed the funding in a statement. A Maputo-based spokeswoman for the Total-led project did not respond to a request for comment.
The financing performance underscores confidence in the $ 23 billion Mozambique LNG project. While crude oil has made a partial comeback due to the worst effects of the pandemic, the gas market continues to face massive oversupply. Nonetheless, lenders are relying on the country’s location in southern Africa to facilitate export and the sheer size of the gas deposits associated with the project.
The project, which could be transformative for the country’s economy, is still facing major challenges, including its location in an area where an Islamist uprising started in 2017.
Total Tops financing goal for large gas project in Mozambique
Similar plans, including Exxon Mobil Corp.’s Rovuma LNG to be built alongside Total’s facility, have been delayed due to lower energy prices and the pandemic. According to Societe Generale SA, the project’s financial advisor, LNG’s funding efforts in Mozambique still raised $ 600 million more than planned, with prices at pre-coronavirus levels
Mozambique LNG will generate about $50 billion in revenue for Mozambique’s government over 25 years, according to Total. That will be supplemented by sales from the even bigger project led by Exxon.
While the site is in a geographically strategic location between Europe and Asia, the onshore plant, which is being built in the northern Cabo Delgado province faces other challenges. The site registered a number of Mozambique’s early infections of Covid-19, with control efforts complicated by the movement of foreign workers.
