TotalEnergies and its partners in the Area 1 (Mozambique LNG) consortium have agreed to provide additional capital to replace the entities that withdrew from the project.
The UK government announced that it will no longer provide $1.15 billion (loans and export credit insurance) it had committed to Area 1 in Afungi, Cabo Delgado, citing excessive risk. The Dutch government stated that Total had chosen to cancel an insurance request with Atradius, its export credit division, just as the Netherlands was finalizing a decision on withdrawal based on an independent human rights assessment.
“The Mozambique LNG partners decided to proceed without the participation of UKEF and Atradius, as these two export credit agencies had not yet reconfirmed their commitment,” which represented around 10% of the financing, TotalEnergies explained in a statement.
The agreement dates back to 2020, when the consortium secured $15.4 billion in financing from a group of around 30 lenders, including export credit agencies and commercial banks.
“Additionally, TotalEnergies became aware of reports commissioned by the Dutch Ministry of Finance from external consultancies Clingendael and Pangea Risk regarding the human rights and security situation in Cabo Delgado,” the company announced. The multinational regretted that “both external consultancies did not travel to Mozambique to conduct on-site investigations, producing a report based mostly on information gathered through third parties.” In the same statement, Total again rejected accusations of complicity in acts of violence carried out by Mozambican soldiers, referring to clarifications published on its official website.
All Awaiting Resumption of Construction
The 13 million metric ton per year liquefied natural gas (LNG) project — a resource expected for over a decade to transform the country into a major gas exporter — now has an earliest estimated production start in 2029. Extremist attacks in 2021 led to the suspension of construction at the Afungi industrial complex, where gas is received from subsea pipelines and enters the liquefaction trains before being stored in special tanks. From there, it will be exported to LNG carriers at specially constructed berths.
All these works will take time and are expected to resume only after TotalEnergies reaches an agreement with the government regarding the costs caused by the four-year suspension and the method of compensation.
