The African Development Bank (AfDB) has approved a $400 million long-term senior loan to support the Total-led Mozambique LNG project.
The bank said financial close for the project was expected in the first half of 2020. The total cost of the project is expected to be around $20 billion. The US’ Export-Import Bank approved $5bn of lending for the facility in September. Mozambique LNG should be the largest foreign direct investment in Africa to date.
Signing up to the Mozambique LNG work is in line with the AfDB’s work to support Africa’s transformation, said the head of the bank Akinwumi Adesina, from developing to developed.
“Working closely with the Government of Mozambique, we can ensure that the local population reaps the benefits from its nascent natural gas value-chain, thus creating growth opportunities and widespread industrialization, while at the same time accelerating regional integration across Southern Africa,” Adesina added.
AfDB paid particular attention to the local benefits, which in addition to employment opportunities also include an amount of gas going to local consumption. In particular, the Mozambique LNG project aligns with three of its “High 5” priorities. The work will help industrialise the continent, it will provide fuel for power generation and it will improve the quality of life through the creation of jobs and related industries.
The bank also noted the impact beyond Mozambique, with benefits likely also to be felt throughout the wider region. South Africa, for instance, has talked of securing LNG from the projects in the northern Rovuma Basin and also expects there to be opportunities for its companies to play a part in developing the facility.
AfDB and the US’ EXIM bank support for the LNG plan stand in contrast with the recent decision taken by the European Investment Bank (EIB) to move away from oil and gas financing, from the end of 2021. There is broad pressure on the banking sector focused on eroding support for hydrocarbons as part of the world’s efforts to tackle climate change.
Total acquired Anadarko Petroleum’s assets earlier this year, via Occidental Petroleum, closing its purchase of the Mozambique assets in September. It acquired a 26.5% stake in the facility for $3.9bn. The final investment decision (FID) for Mozambique LNG was taken in June. The plan involves bringing gas onshore from Area 1.
Other participants in the project include Mitsui, Oil India, ONGC Videsh, Bharat Petroleum, PTT Exploration and Mozambique’s state-owned Empresa Nacional de Hidrocarbonetos (ENH).
ExxonMobil is working on an adjacent project, involving an onshore plant in the same Afungi LNG Park and with gas coming from Area 4. There had been discussion that FID for the Rovuma LNG plant would be reached in the summer but this was delayed, with the partners only reaching an initial investment decision. FID is now expected in 2020.
The 12.88 million tonne per year Mozambique LNG was first tipped to reach FID in 2014 but was delayed as the project backers needed long-term offtake deals in order to secure financial support from banks. The partners in the 15.2mn tpy Rovuma LNG have opted to take export volumes themselves, making the process substantially faster.
Recommended for you
