The French oil and gas company Total has signed a financial agreement in the amount of 14.9 billion dollars (13 billion euros) for a gas project in Mozambique, where vast sub-sea reserves were discovered in 2010.
The funding was secured for a $23 billion liquefied natural gas (LNG) project – in a 40/60 percent equity to debt structure – in the northern Cabo Delgado province, near the border with Tanzania.
The deal will see Mozambique become a major energy exporter worldwide, and has the potential to transform the country’s economy.
It includes the development of the Golfinho and Atum natural gas fields and the construction of a two-train liquefaction plant with a total capacity of 13.1 million tons per annum.
“This is the largest project financing ever in Africa,” according to Total, and will be financed “by direct loans and guaranteed loans from eight export credit agencies, 19 commercial banks and the African Development Bank,” the company said in a statement.
“The signing of this large-scale project financing is a significant step and represents an important milestone in the development of Mozambique natural gas, and this less than a year after Total took over the role leading operator role,” Jean-Pierre Sbraire, Chief Financial Officer of Total declares.
“This success illustrates the confidence of financial institutions in the long-term future of natural gas in Mozambique,” he added. This agreement was signed despite the uncertainties caused by the coronavirus health crisis and despite an armed insurgency in the region.
Northern Mozambique is plagued by an Islamist insurgency, which has already claimed at least 1,300 lives since 2017, according to the NGO The Armed Conflict Location & Event Data Project (ACLED), and has complicated government plans to develop the extraction of the region’s gas reserves.
In early July, gunmen attacked and killed eight employees of a private company working on the liquefied natural gas extraction project.
The attack took place some 50 km from a Total site in Palma, but the group said it would not be deterred by the unrest.