UK Export Finance (UKEF) is set to back a $20 billion (£16 billion) liquefied natural gas (LNG) project in Mozambique, a source with direct knowledge of the matter said on Friday.
The Britain’s export credit agency listed the project, led by French energy major Total, as under consideration for financing last August.
The source said UKEF was planning to commit funding probably to the tune of around $800 million to the project.
“UKEF cannot comment on speculation on potential transactions for reasons of commercial confidentiality,” a spokeswoman said.
Government offers $2.25B funding guarantee
Earlier this month, National Hydrocarbon Company (ENH), a Mozambique’s state-owned, has assured the partners in the country’s Liquefied Natural Gas (LNG) project a $20 billion gas project led by Total, that it will pay the state oil company’s equity share of $2.25 billion government guarantee if required.
Carlos Zacarias, president of Mozambique’s regulator, the National Petroleum Institute (INP), said the state financing had been secured and the partners have accepted $2.25 billion government guarantee in lieu of an immediate equity contribution from ENH. Zacarias said the guarantee was valid for five years.
Each partner in the project is required to make a minimum capital contribution. ENH has a 15% interest in the project that is expected to start production in 2024, while Total owns 26.5% after acquiring its stake from Anadarko for $3.9 billion in 2019.
Total has also secured $15 billion in funding for the project and the funding agreement is expected to be sealed on 30 June 2020.
The Mozambique LNG Project started with the discovery of a vast quantity of natural gas off the coast of northern Mozambique in 2010, leading to a $20 billion Final Investment Decision in 2019. Now, through cooperation and responsible project planning, the project is on track to deliver LNG in 2024.
The LNG Project in Mozambique comprises the Golfinho-Atum gas field development in the offshore Area 1 Block of the deep-water Rovuma Basin and the construction of a 12.88 million tonnes per annum (Mtpa) onshore liquefied natural gas (LNG) facility on the Cabo Delgado coast of Mozambique.
Presently, Total plans for the approximately 65 trillion cubic feet of recoverable natural gas include a two-train project with the ability to expand up to 43 million tonnes per annum (MTPA).
The projects have the potential to make Mozambique, one of the world’s least developed countries, a major LNG player. Total and other big oil companies are touting LNG as a transition fuel as it produces fewer emissions than crude oil.
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