The project, the largest foreign direct investment in Africa to date worth more than US$24 billion, will exploit Mozambique’s vast offshore natural gas reserves, which could potentially transform global energy markets. The African Development Bank signed a US$400 million senior loan to finance the project in July 2020.
In signing the loan agreement, the African Development Bank joined the global syndication of commercial banks and export credit agencies providing financing. This financing includes direct loans as well as the 16-and 18-year-old loans covered by the Export Credit Agency.
The project is being implemented by an international consortium of energy developers and operators led by Total as the project operator. It contains Mitsui, Oil India, Bharat Petroleum, PTTEP, Oil and Natural Gas Corporation (ONGC) and Mozambique’s National Petroleum and Gas Company, Empresa Nacional de Hidrocarbonetos (ENH).
The consortium provides the balance of funding through equity. The financial closure of the project is expected to take place in 2021.
Mozambique is expected to become one of the world’s largest exporters of LNG. Its gas is an important source of diversification of the supply of LNG. The project will boost the country’s ability to meet energy demand through gas-fired electricity and will support its audacious goal of providing universal access to energy to its citizens by 2030.
The project may also potentially feed downstream industries that use natural gas, such as fertilisers and electricity producers. It can thus become a driving force for agricultural development and trade across the Southern African Development Corporation region.
PFI is the leading source of intelligence for global project finance. In its award announcement, the Commission noted that the project had faced many challenges in securing funding, including the Covid-19 pandemic.