UK Pulls $1.15 Billion Backing From TotalEnergies’ Mozambique LNG Project
Britain has withdrawn $1.15 billion in financial support from TotalEnergies’ $20 billion Mozambique LNG development, citing increased project risk. The decision follows renewed security concerns and ongoing human rights scrutiny as TotalEnergies prepares to restart construction.
(Reuters) — Britain's government said on Monday it was withdrawing its $1.15 billion backing for the TotalEnergies-led Mozambique LNG project, slated to make the African nation a major liquefied natural gas exporter to Europe and Asia.
Britain in 2020 promised a $300 million loan and insurance worth about $700 million for the $20 billion project via UK Export Finance, shortly before it pledged to stop providing direct government support for overseas fossil fuel projects.
The project was halted in 2021 due to an Islamist insurgency. Total lifted force majeure on its development in November, but made restarting construction 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."
"This view is based on a comprehensive assessment of the project and the interests of UK taxpayers, which are best served by ending our participation in the project at this time."
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.
TotalEnergies declined to comment. Mozambique's government did not respond to a request for comment.
Total Has Said Project Can Proceed Without UK Financing
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 commercialized via contracts with buyers, Total has 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.
Pouyanne told investors in February that Mozambique LNG shareholders were ready to exercise their contractual rights to ensure UKEF and Atradius, the Netherlands' export finance arm, approved the funds initially promised.
Kyle said UKEF would pay back the project for any premium paid. A UKEF spokesperson declined to name the amount.
A spokesperson for Dutch export arm Atradius, which pledged about $1 billion of insurance to the project, said in July an independent human rights due diligence review was ongoing, but that "there is no clearly defined deadline" for that review.
In March, the U.S. Export-Import Bank approved a nearly $5 billion loan for the project.
Criticism From Environmental, Human Rights Groups
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. The company has said there is no evidence of that.
In April UKEF hired law firm Beyond Human Rights Compliance LLP to investigate risks around Mozambique LNG following media reports of the alleged torture, three people interviewed by the firm told Reuters.
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.