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TotalEnergies-led Mozambique LNG project loses R2.2bn backing
Britain and the Netherlands are withdrawing a combined $2.2bn in support for the TotalEnergies-led Mozambique LNG project, they said separately, after both hired firms to probe human rights concerns surrounding the development.
Image credit: Reuters/Stephanie Lecocq/File Photo
Britain's government said it was rescinding its $1.15bn backing for the project after promising in 2020 a $300m loan and insurance worth about $700m for the $20bn project via UK Export Finance.
The Dutch government also said Total had withdrawn a $1.1bn export insurance request for the project.
Atradius Dutch State Business authorised $1.3bn in export insurance via two policies, the larger of which has been rescinded at the company's request, the Dutch finance ministry said.
TotalEnergies declined to comment. Mozambique's government did not respond to a request for comment.
Increased risks
Mozambique LNG's construction was halted in 2021 due to an Islamist insurgency. Total lifted force majeure on its development in November, but made restarting conditional on the Mozambican government's approval of a new budget, which the president said he may dispute.
"In preparation to restart the project, UKEF was presented with a proposal to amend the financing terms it had agreed originally," British business minister Peter Kyle said in a statement.
"My officials have evaluated the risks around the project, and it is the view of His Majesty’s Government that these risks have increased since 2020." The interests of UK taxpayers "are best served by ending our participation in the project at this time," he added.
Jihadist attacks have been back on the rise in Mozambique, with Total bringing in workers and equipment this year by air and sea for security reasons.
Moving forward with equity
In April, TotalEnergies CEO Patrick Pouyanne told investors that project partners could move forward without UK and Dutch financing, using equity.
More than 70% of the project's financing is secured, and about 90% of the future gas production is commercialised via contracts with buyers.
Kyle said UKEF would pay back the project for any premium paid. A UKEF spokesperson declined to name the amount.
The Dutch finance minister said TotalEnergies had asked to cancel part of its insurance via a letter dated 24 November, just as an independent human rights review ordered by the ministry was being finalised.
"This means that the Netherlands will no longer be involved in financing the project," the statement reads.
A $213m policy insuring Dutch contractor Van Oord remains in place, a ministry spokesperson said.
TotalEnergies holds a 26.5% operating stake in Mozambique LNG. Japan's Mitsui owns 20% in the project and Mozambique state firm ENH 15%, alongside smaller stakeholders including India's ONGS and Oil India.
In March, the US Export-Import Bank approved a nearly $5bn loan for the project.
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Claims lack evidence
Human rights nonprofit ECCHR last month filed a criminal complaint against TotalEnergies, alleging it was complicit in torture and enforced disappearances allegedly carried out by government soldiers in Mozambique.
In April, UKEF hired law firm Beyond Human Rights Compliance LLP to investigate risks around Mozambique LNG following initial media reports of the alleged torture, three people interviewed by the firm told Reuters.
TotalEnergies has said those claims lack evidence.
The Dutch government said the two firms it hired to investigate — Clingendael and Pangea Risk — found the torture allegations credible. However, they could not ascertain Total's knowledge or role, if any.
A London court in 2023 dismissed a court challenge by environmental group Friends of the Earth against the British government's funding for the project.