Total and Mitsui Complete 15.8 billion Financing for Mozambique LNG Project – Government
The Mozambique LNG project, headed by Total and Mitsui, has ensured financing worth USD 15.8 billion that was pending for the construction of infrastructure in the Mozambican province of Cabo Delgado.
According to Mozambican minister of Mineral Resources and Energy, Max Tonela, “sufficient resources are now guaranteed to finance the entire process and to build the infrastructure for the production of liquefied natural gas (LNG) in Afungi” peninsula, Cabo Delgado, where the LNG projects will be centered.
According to the Mozambican press, Tonela was speaking on 03 July after a meeting with Total Exploration and Production president, Arnaud Breulliac.
The USD 15.8 billion, Tonela added, were pending from a total investment estimated at USD 23 billion. The rest, he added, was guaranteed since the final investment decision.
According to the Mozambican minister, the Area 1 project points to global gains, over 25 years, of USD 61 billion and “the Mozambican state, through taxes, profit sharing and participation of the Mozambican state oil company ENH will take just over 50%” of that total, about USD 31 billion.
Total operates Mozambique LNG with a 26.5% participating interest alongside ENH Rovuma Área Um, S.A. (15%), Mitsui E&P Mozambique Area1 Ltd. (20%), ONGC Videsh Ltd. (10%), Beas Rovuma Energy Mozambique Limited (10%), BPRL Ventures Mozambique B.V. (10%), and PTTEP Mozambique Area 1 Limited (8.5%).
According to Total, the Mozambique LNG project is largely derisked since almost 90% of the production is already sold through long-term contracts with key LNG buyers in Asia and in Europe. Additionally, the project is expected to have a domestic gas component for in-country consumption to help fuel future economic development.
Total acquired its 26.5% operated interest in the Mozambique LNG project from Anadarko for USD 3.9 billion in September 2019.
Last week, Bloomberg had reported that the project led by Total had begun a process to finalize USD 15 billion of financing.
The USD 23-billion project to ship super-chilled gas from Africa to markets around the world involved lenders including about 20 banks. It has continued to move forward even as plans for other facilities in the region and globally have slowed amid slumping LNG prices.
Exxon Mobil Corp. has delayed a final investment decision on its planned Rovuma LNG project, located next to Total’s, as part of a reduction in capital spending this year. The liquefaction operation was originally scheduled to come online in 2024, like Mozambique LNG.
Total’s country manager for Mozambique, Ronan Bescond, told reporters at the project site on June 18 that completion of the financing would be “an absolutely remarkable milestone in the current environment.”
Nikkei Asian Review reported last weekend that the Japanese government will invest some USD 14.4 billion in liquefied natural gas development in Mozambique, in partnership with the business sector.
Three Japanese private banks will provide most of the debt funding for the project, and the state-owned Japan Bank for International Cooperation will supply USD 3 billion in loans.
Another report also mentions USD 3 billion to be provided in debt financing for the Mozambique LNG project in which Mitsui & Co. is a minority partner.
Japan is the world’s largest importer of liquefied natural gas, and earlier this year, the Nikkei Asian Review reported that the country’s LNG supply security was threatened by the coronavirus outbreak, with stockpiles at the time only sufficient for two weeks of consumption.
Mozambique, on the other hand, is turning into a hotspot for the LNG industry, with Total’s USD 20-billion Mozambique LNG project to produce close to 13 million tons of the fuel annually, and Exxon’s Rovuma project to yield some 15.2 million tons once operational.