London, 5 Feb (AIM) – The British government is seeking legal advice on whether it can withdraw its 1.15 billion dollar support for TotalEnergies’ liquefied natural gas (LNG) project in northern Mozambique, according to a report in Tuesday’s Financial Times.
The Mozambique LNG project, led by the French multinational TotalEnergies, requires an estimated investment of 20 billion dollars. However, the project is currently on hold due to Islamist terrorism in parts of Cabo Delgado province.
In 2020, the British government agency UK Export Finance (UKEF) committed to providing direct loans and guarantees to support the project’s design, construction, and operation. However, according to the Financial Times, two sources familiar with the situation said the Labour government, elected last year, is committed to transitioning away from fossil fuels and is seeking legal advice on whether it is still bound by the commitment. This would be in line with the decisions taken at the 2021 UN Climate Change Conference (COP26) in Glasgow, and British government pledges to end new export finance for oil and gas projects.
One source stated, “Number 10 [the Prime Minister’s Office] has been trying to find a way for this not to happen, but they are worried about being countersued if they don’t follow through”.
A British government official, quoted in the Financial Times, described operating in Mozambique as “a bloody nightmare. It’s very challenging on the ground there to figure out what’s going on. It’s also challenging to work out whether or not we can get out of it, we are really concerned about it”. The official added, “It’s not the environmental concerns that are the problem, it’s the volatile situation”.
The report also notes that other governments, including the United States and the Netherlands, are reconsidering their commitments to the project. The Dutch credit agency is reassessing the “security and human rights situation” before deciding whether to reissue one billion euros in export credit insurance, the Netherlands’ finance ministry told the Financial Times.
TotalEnergies hopes to resume activity soon and on 27 January, Mozambican President Daniel Chapo announced on his X (formerly Twitter) account that he had recently met with TotalEnergies Chairperson Patrick Pouyanné.
He stated that, during their discussion, Pouyanné reaffirmed TotalEnergies’ commitment to resuming the project. While security conditions in Palma have improved, terrorists remain active in other parts of Cabo Delgado, particularly along the E380 road connecting the province’s northern and southern districts.
Fresh negotiations with the Mozambique LNG consortium may be required – not only due because of security concerns but also for what are described as “contractual adjustments.”
(AIM)
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