The British government has made a dramatic U-turn on funding for TotalEnergies’ liquified natural gas project in Mozambique, withdrawing up to $1.15 billion in financing despite the French energy giant recently lifting its suspension of work at the site.
Business Secretary Peter Kyle announced Monday that UK Export Finance (UKEF) has decided to halt financing for the project, stating that “the government believes that UK financing of this project will not advance the interests of our country.”
The $20 billion LNG project was suspended in 2021 following a devastating jihadist attack that killed an estimated 800 people in Mozambique’s restive northeastern Cabo Delgado province. TotalEnergies lifted the force majeure it had declared after the siege in October and is seeking $4.5 billion in cost overruns linked to the delay, to be covered by the Mozambican government.
The company, which owns 26.5 percent of the project, has indicated it hopes to resume production at the gas site in 2029, subject to Mozambique’s approval of its new budget plan.
The UK government’s decision comes amid mounting criticism from Mozambican and international NGOs, which have accused TotalEnergies of holding Mozambique “hostage” over demands for “ultra-favourable” conditions to restart operations.
Kyle emphasized that Britain “remains committed to backing British exporters, including through support from UKEF” and maintains its “national partnership with Mozambique and building long-term respectful relationships with African countries to boost sustainable growth, tackle the climate crisis and address insecurity.”
Several gas projects in Cabo Delgado, involving TotalEnergies, Italian group ENI, and American oil giant ExxonMobil, could potentially make Mozambique one of the world’s top ten natural gas producers, contributing 20 percent of African production by 2040, according to a 2024 Deloitte report.
Environmental groups have criticized these projects as “climate bombs” that would bring limited benefits to Mozambicans, more than 80 percent of whom lived below the poverty line of three dollars per day in 2022, according to World Bank data.Source: france24.com