UK Considers Withdrawing $1-Billion Financing For Mozambique LNG

The UK government is seeking legal advice on whether a 2020 commitment to finance the $20-billion Mozambique LNG project with $1.15 billion is still binding, the Financial Times reported on Tuesday, citing sources familiar with the matter.

Back in June 2020, government agency UK Export Finance (UKEF) made the decision to provide up to $1.15 billion worth of direct loans and credit guarantees to UK firms involved in the project, as part of its remit to support UK exports.

The $20-billion LNG export project in Mozambique led by TotalEnergies was halted in 2021 due to a deteriorated security situation and has been under force majeure ever since.

In the meantime, the Conservative UK government of Boris Johnson in December 2020 pledged to end taxpayer support for fossil fuel projects overseas as soon as possible.

Now the Labour government is taking legal advice over whether the UKEF pledge to support the Mozambique project is still binding, according to FT’s sources.

“Number 10 have been trying to find a way for this not to happen, but they have been worried about being countersued if they don’t do it,” a source close to the incumbent government told FT

Last month TotalEnergies told FT that the complicated political uncertainties and security issues had forced the French supermajor to push back once again the restart of works for its project in Mozambique.

In 2021, following Islamist militant attacks in towns close to the site, TotalEnergies suspended works on the $20-billion project, which was Africa’s largest foreign investment when announced.

Since 2021, TotalEnergies has waited for several conditions to be met to take a positive decision on resuming work on the project. The goal to achieve first LNG production has also slipped, first to 2027, and later, to 2029.

Now the 2029 timeline is also threatened as TotalEnergies did not resume work on Mozambique LNG by the end of 2024, as planned last year.

TotalEnergies confirmed to FT that its plans to restart the project by the end of last year slipped amid the disputed presidential election in Mozambique, the continued violence, and concerns about the security situation.

Source: Oilprice.com