Total SA’s Mozambique liquefied natural gas project has completed as much as $16 billion in funding involving a score of banks, despite a slowdown in energy investment as the coronavirus hammers the global economy.
The African Development Bank will provide $400 million in senior loans and the Japan Bank for International Cooperation signed a loan agreement for as much as $3 billion for the project in northern Mozambique, they said Thursday in separate announcements. India Oil Ltd., a partner, also confirmed the financing.
The amount raised, which includes a loan from the Export-Import Bank of the U.S., matches the African nation’s gross domestic product. A Maputo-based spokeswoman for the Total-led project didn’t immediately respond to a request for comment.
The financing achievement underscores the faith being shown in the $23 billion project known as Mozambique LNG. While crude oil has staged a partial comeback from the worst effects of the pandemic, the gas market continues to face a massive oversupply. Despite this, lenders are betting on the country’s location in southern Africa for ease of export, and the sheer size of gas deposits linked to the project.
Similar projects, including Exxon Mobil Corp.’s Rovuma LNG to be built next to Total’s facility, have been delayed due to depressed energy prices and the pandemic. Mozambique LNG’s funding effort still raised $600 million more than planned, with pricing at pre-coronavirus levels, according to Societe Generale SA, the financial adviser for the project.
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. It is also located in an area where an Islamist insurgency began in 2017.
Mozambique’s state-owned Empresa Nacional de Hidrocarbonetos, Mitsui & Co Ltd., ONGC Videsh Ltd., PTT Exploration and Production Pcl and Bharat Petroleum Corp. are also partners in Mozambique LNG.
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