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Total secures Mozambique LNG financing

Total is returning workers to Mozambique LNG after receiving assurances from the government on a new security zone.
Mozambique LNG and Area 1

The $14.9 billion Mozambique LNG financing has been signed, Oil India Ltd (OIL) has said.

The financing will support the Total-led project, which is working on two LNG trains to process gas from Area 1. OIL said it expected financial close for the project in the fourth quarter of the year.

Total confirmed the financing had been signed on July 17.

“The signing of this large-scale project financing, less than one year after Total assumed the role of operator of Mozambique LNG, represents a significant achievement and a major milestone for the project,” declared Jean-Pierre Sbraire, Chief Financial Officer of Total.

“It demonstrates the confidence placed by the financial institutions in the long-term future of LNG in Mozambique. This key milestone has been reached thanks to the dedication of the Mozambique authorities and the financial partners of the project.”

Financiers signed off on the agreement on June 15, OIL said in a statement to the Bombay Stock Exchange (BSE). The companies behind the Mozambique LNG project took the final investment decision in June 2019.

The financing comes from a number of sources. UK Export Finance (UKEF), US EXIM Bank, the Japan Bank for International Co-operation (JBIC) and the Thai Export-Import Bank (EXIM) are all export credit agencies (ECAs) and provided direct loans.

ECAs also provided covering facilities, with UKEF cropping up again, in addition to Atradius, ECIC, SACE and NEXI.

The African Development Bank (AfDB) approved a loan facility. In November 2019, the bank said it would provide $400 million.

OIL did not name the commercial banks that were also involved.

ECAs

EXIM has previously said it would provide $4.7 billion to the project. This should provide work for nearly 17,000 US jobs, it said in April, and involve 68 suppliers.

UKEF is providing up to $300mn through direct loans, with another $850mn in guarantees for commercial banks. While UK companies do not hold direct equity stakes in the project, the country does expect to benefit from work.

Contracts from Mozambique LNG will support a number of UK businesses, sustaining more than 2,000 jobs.

Environmental campaigners have protested at the move, saying these are out of step with commitments to tackle climate change.

JBIC will provide up to $3bn, it said. The Japanese bank noted the role of flexible LNG deliveries from the project, which has taken an increased prominence for the country.

Total has a 26.5% stake in Mozambique LNG, which it acquired from Anadarko Petroleum, via Occidental Petroleum. OIL has a 40% stake in Beas Rovuma Energy Mozambique Ltd, which has a 10% stake in the project. ONGC Videsh has the other 60% stake in this venture.

Other participants in the project include Mitsui, PTT Exploration and Production and local state-owned Empresa Nacional de Hidrocarbonetos (ENH).

Updated at 1:10 pm with details on UKEF’s lending. 

Updated at 8:20 am on July 17 with details on AfDB, US EXIM and JBIC lending. 

Updated at 19:20 on July 17 with confirmation from Total. 

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