The EXIM Bank has approved a USD 4.7 billion loan for TotalEnergies’ LNG project in Mozambique, potentially boosting the project and the country’s economy. Despite this, ongoing security risks and political instability present challenges, with the project expected to restart in 2025 under favorable conditions. Successful development could lead to significant economic benefits and facilitate future LNG initiatives in the region.
The Export-Import Bank of the United States (EXIM) has reportedly approved a USD 4.7 billion loan for TotalEnergies’ liquified natural gas (LNG) project in Mozambique, potentially enhancing the project’s prospects. According to Fitch Ratings, if confirmed, this funding could significantly benefit Mozambique over the medium term, despite ongoing security risks that may hinder project completion.
Mozambique’s Energy Minister, Estevão Pale, announced that EXIM’s board has voted in favor of the project, although official confirmation from the bank is still anticipated. This news follows the downgrade of Mozambique’s credit rating to ‘CCC,’ signaling improved financing possibilities under the new US administration, given volatile political conditions affecting previous commitments from other export credit agencies.
Fitch Ratings maintains that the TotalEnergies LNG project could resume in 2025 once the current force majeure, declared in 2021, is lifted. Despite TotalEnergies indicating earlier that operational status would not be achievable by 2029, a prompt resumption could enable limited production by 2030. Successful project development would enhance Mozambique’s economic growth, export revenues, and fiscal sustainability, particularly as the government approaches significant Eurobond repayments beginning in 2028.
Moreover, the revival of TotalEnergies’ project could catalyze a USD 30 billion LNG initiative by ExxonMobil, potentially yielding the largest production capacity in Mozambique’s LNG sector. ExxonMobil’s project is projected to produce 18 million tonnes per annum, with construction contributing to economic growth until production starts post-2030. Separately, Eni is advancing its Coral North floating facility, expected to commence in 2027-2028, although this is independent of TotalEnergies’ timelines.
Nonetheless, security threats and political instability remain significant concerns for the TotalEnergies project. The continuation of security support from a Rwandan force, present since 2021, faces uncertainty, particularly amid external funding complications stemming from EU political tensions. Additional socio-political unrest in Mozambique could further delay project advancements.
In conclusion, while the development of Mozambique’s LNG sector is crucial to its medium-term credit outlook, various factors—including government access to financing and domestic stability—will play more critical roles in shaping the country’s sustainability and credit rating.
In summary, the anticipated USD 4.7 billion loan from the EXIM Bank could significantly improve the prospects of TotalEnergies’ LNG project in Mozambique, presenting opportunities for economic growth and enhanced export revenues. However, the trajectory remains clouded by persistent security concerns and political instability, necessitating stable governance and financing for positive outcomes in the LNG sector.
Original Source: clubofmozambique.com
