What You Need to Know
TotalEnergies and its partners have announced additional funding for their $20 billion liquefied natural gas project in Mozambique. This decision follows the withdrawal of UK and Dutch financing agencies due to security and human rights concerns. The project aims to position Mozambique as a key player in the global gas market by 2029, despite ongoing challenges.
Africa. TotalEnergies and its partners in the $20 billion liquefied natural gas project in Mozambique have announced additional contributions to compensate for the withdrawal of British and Dutch financing agencies.
This decision comes after London and Amsterdam retracted their support for the project due to security and human rights risks, as the company seeks to relaunch the project after years of setbacks.
The British Export Finance Agency announced on Monday the cancellation of loans and guarantees worth $1.15 billion, deeming the project too risky.
Meanwhile, the Dutch government clarified that Total had canceled its request for insurance from Atradius, the export credit agency, coinciding with an independent review that concluded there were “credible allegations” of human rights violations committed by government soldiers near the project site.
This withdrawal represented about 10% of the total external financing that the project had received at its inception, amounting to $15.4 billion.
A Major Project Amid Security Challenges
The project, led by Total with an annual production capacity of 13 million tons, is expected to transform Mozambique into a key player in the global gas market by 2029.
However, its progress has been hindered since 2021 when armed attacks in Cabo Delgado forced the company to freeze construction for four years.
Last month, a “force majeure” declaration was lifted, allowing work to resume amid hopes that the project will contribute to revitalizing the local economy, despite ongoing security and human rights concerns.
Total stated that project partners unanimously agreed to provide additional contributions to offset the withdrawals from London and Amsterdam, noting that agreements with other lenders were adjusted to align with the prolonged freeze and new timeline.
This new financial arrangement reflects the partners’ desire to move forward without relying on financing agencies that have yet to confirm their support.
Ongoing Human Rights Debate
Despite Total’s assertion that the Dutch human rights review report relied on external sources and did not conduct field investigations, international human rights organizations continue to warn that the project could exacerbate tensions in northern Mozambique.
While the government and companies bet on substantial economic returns, observers argue that ongoing alleged violations could place the project in the midst of ethical and political challenges, alongside security and financial issues.
The Mozambique liquefied natural gas project, led by TotalEnergies, has faced significant challenges since its inception. Security issues, particularly in the Cabo Delgado region, have led to construction halts and increased scrutiny over human rights violations. The project, valued at $20 billion, is seen as a potential economic boon for Mozambique, but its future remains uncertain amid these ongoing concerns.
In recent years, international financing has become increasingly cautious, particularly after the UK and Dutch agencies withdrew their support. This withdrawal reflects broader concerns about the project’s viability and the socio-political climate in Mozambique.
