EXIM may approve a $4.7 billion loan for TotalEnergies’ LNG project in Mozambique, potentially enhancing development prospects despite security risks. The project could boost economic growth and export revenues, but ongoing political instability raises concerns. Various other LNG projects, including those from ExxonMobil and Eni, are also under consideration, with significant impacts expected post-2028.
The U.S. Export-Import Bank (EXIM) has reportedly approved a $4.7 billion loan for TotalEnergies’ liquefied natural gas (LNG) project in Mozambique. If confirmed, this financial support could enhance the project’s prospects, yielding various benefits for Mozambique in the medium term. Nevertheless, Fitch Ratings warns that ongoing insecurity presents substantial risks to the project’s completion.
Mozambique’s Energy Minister, Estevão Pale, mentioned that the EXIM board’s vote indicated approval of the loan; however, formal confirmation from EXIM is still pending. This potential financing aligns with Fitch Ratings’ assessment, reflecting a more favorable outlook for Mozambique’s loan prospects under the new U.S. administration, following a downgrade from ‘CCC+’ to ‘CCC’ in February 2025.
Fitch Ratings anticipates that work on the TotalEnergies LNG project could resume in 2025, contingent on lifting the force majeure that has been effective since 2021. After political unrest in late 2024, TotalEnergies indicated that the project’s completion may not occur by 2029, yet a rapid return to work could enable some production by around 2030.
Successful advancement of this project is crucial for economic growth, contributing significantly to Mozambique’s export revenue and fiscal health. The first repayments of approximately $250 million annually on Mozambique’s $900 million Eurobond are due from 2028, before maturity in 2031, potentially coinciding with the project’s production timeline.
Further investment prospects are highlighted by the expected final decision on ExxonMobil’s proposed $30 billion LNG project, which could expand Mozambique’s LNG capacity dramatically. This project would involve primarily onshore facilities, with a projected capacity of 18 million tonnes per annum (mtpa), surpassing the 12.9 mtpa of TotalEnergies’ project, with production commencing after 2030.
Additionally, Eni is advancing with its second floating facility, Coral North, likely matching Coral South’s capacity of 3.7 mtpa. This facility is expected to commence production around 2027-2028, providing economic growth independently of TotalEnergies’ project.
However, security concerns and political instability loom over the TotalEnergies LNG project’s resumption. The presence of Rwandan forces, essential for regional security, and EU funding for these forces are under scrutiny, particularly after the EU imposed restrictions on certain members of the Rwanda Defence Force in March 2025 due to involvement in regional conflicts. Ongoing political and social unrest in Mozambique could also impede project progress.
The LNG sector’s development is vital for enhancing Mozambique’s medium-term credit outlook. However, Fitch Ratings considers government access to external financing, fiscal consolidation efforts, and the potential alleviation of domestic tensions as more critical factors affecting the sovereign rating in the immediate future.
The potential approval of a $4.7 billion loan by EXIM for TotalEnergies’ LNG project could significantly impact Mozambique’s economic landscape amidst existing security risks. Despite uncertainties and ongoing political challenges, the project’s resumption in the next few years might lead to substantial economic benefits. Monitoring external financing access, public finance consolidation, and social stability will be pivotal for Mozambique’s financial health moving forward.
Original Source: clubofmozambique.com
