The UK government is reassessing its $1.15 billion financing commitment to Mozambique’s $20 billion LNG project due to legal concerns and policy changes regarding fossil fuel support. Since 2021, the project has been suspended over security issues, causing TotalEnergies to delay potential resumption dates. Current estimates for first production have shifted to 2029, with risks of further setbacks.
The UK government is evaluating the legality of its commitment to finance a $20 billion LNG project in Mozambique with $1.15 billion, as initially pledged in June 2020. This decision by the UK Export Finance (UKEF) agency involved providing loans and guarantees to promote UK exports amid political changes. The Mozambique LNG project led by TotalEnergies was suspended in 2021 due to escalating security issues, which have raised doubts about recovery timelines and project viability.
In 2020, under then-Prime Minister Boris Johnson, the UK committed to ceasing taxpayer support for foreign fossil fuel projects, complicating the situation for the current Labour government. Sources indicate that Number 10 is exploring ways to withdraw support without facing potential legal consequences. As of now, discussions are ongoing about whether the previous commitment to UKEF is still enforceable, amidst ongoing insecurity in Mozambique and project delays.
TotalEnergies has repeatedly postponed resuming operations on the Mozambique LNG site, initially aimed for production start in 2027 but now pushed to 2029, contingent upon improved security conditions. However, with unresolved issues from the 2024 deadline for project restart, further delays are likely. The firm attributes these setbacks to ongoing violence and the political instability following a controversial presidential election in Mozambique, impacting project timelines and decisions significantly.
The UK-Mozambique LNG project represents significant foreign investment, with a commitment of $20 billion from TotalEnergies, initially intended to bolster Mozambique’s economy and address global energy needs. However, security threats from Islamist militants since 2021 have stalled progress, leading to a declaration of force majeure. The UK’s previous commitment through the UKEF to support such projects now faces scrutiny against the backdrop of governmental policy shifts towards fossil fuel financing.
In summary, the UK government is reconsidering its financial support for the Mozambique LNG project due to legal and political complications. The ongoing security concerns, potential legal ramifications of withdrawing support, and shifting governmental policies on fossil fuels present challenges to the project’s future. The situation remains fluid, with TotalEnergies facing lengthy delays in operations due to these overarching issues.
Original Source: oilprice.com
