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Friday, June 9, 2023

Total Mozambique LNG Completes $16 Billion Financing

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Mozambique liquefied natural gas (LNG) project has completed as much as $16 billion in funding involving a score of banks, despite a slowdown in energy investment as the coronavirus hammers the global economy.

It is the biggest foreign direct investment in Africa yet, according to law firm White & Case LLP, which advised the financiers. Financial close is expected by the end of September, it said.

“Mozambique LNG is the largest ever foreign direct investment into Africa and is a game changer for the Mozambique energy sector,” said White & Case partner Jason Kerr, who led the Firm’s deal team. “The significant project debt raised from key export credit agencies, development finance institutions and international commercial banks is a testament to the confidence of the international markets in Mozambique’s oil & gas sector.”

The African Development Bank will provide $400 million in senior loans and the Japan Bank for International Cooperation signed a loan agreement for as much as $3 billion for the scheme in northern Mozambique, they said Thursday in separate announcements.

The amount raised, which includes a loan from the Export-Import Bank of the U.S., matches the African nation’s gross domestic product. Oil India Ltd., a partner, also confirmed the financing in a statement.

The financing achievement underscores the faith being shown in the $23 billion project known as Mozambique LNG. While crude oil has staged a partial comeback from the worst effects of the pandemic, the gas market continues to face a massive oversupply.

The large and complex financing will be Mozambique’s first onshore LNG development, initially consisting of two LNG trains with total nameplate capacity of 13.12 million tons per annum (MTPA) to support the development of the Golfinho/Atum fields located entirely within Offshore Area 1.

The project has onshore and offshore components, costs associated with the construction of facilities to be shared with the adjoining Area 4 project, and financing costs.

White & Case partner David Baker, who led the Firm’s commercial team on the project, said: “Mozambique LNG is transformational for the oil & gas industry in Mozambique and will have broader socio-economic benefits for the country. The commercial arrangements are complex and have had to take into account an overarching concession, which has the possibility of multiple development and productions areas, as well as the challenges of a possible future unitized development. However, underpinning the commercial arrangements was a strong regulatory framework. The project revenues come from a broad portfolio of global off-takers on robust terms.”

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