The US Export-Import Bank has approved a $4.7 billion loan for TotalEnergies SE’s Mozambique LNG project, marking a significant milestone in financing efforts. The project, briefly halted by militant attacks, requires improved security and financial assurances for resumption. Environmental groups have criticized the funding amid broader considerations of foreign aid. The loan approval coincided with the Trump administration’s recent appointments to the bank, spurring positive market reactions.
The US Export-Import Bank’s board has authorized a substantial $4.7 billion loan, marking it as the largest portion of financing for the TotalEnergies SE Mozambique LNG project. Construction on this venture was initially suspended four years ago due to security issues stemming from attacks by militant groups linked to the Islamic State. A pivotal aspect of resuming this project is ensuring the safety of the workers returning to the site along with the re-establishment of prior financial commitments from export credit agencies.
Reports indicate that the US Export-Import Bank’s board has formally approved this loan, as revealed by sources knowledgeable about the transaction. Notably, the Financial Times first reported this approval, highlighting a statement from Mozambique’s Energy Minister, Estevão Pale. However, the US Exim has not provided immediate comments regarding the loan following the Bank’s standard business hours.
This confirmation comes in the wake of several appointments ramped up by the Trump administration to the Export-Import Bank, particularly notable after TotalEnergies sought to renew loan approval before the end of the Biden administration in January. The news has positively influenced Mozambique’s eurobonds, which saw a significant rise of up to 3% in value.
The decision to finance this project has garnered criticism from environmental organizations, particularly in light of the ongoing conflict leading to force majeure declarations. Kate DeAngelis, the deputy director for economic policy at Friends of the Earth US, articulated concerns regarding taxpayer-funded foreign aid contrasting with significant financial support to the fossil fuel sector.
Furthermore, it has been reported that over 40% of the contracts tied to this project have been awarded to American companies, as noted by TotalEnergies’ Chief Executive Officer, Patrick Pouyanne. While security conditions have seen marked improvement in the area, Pouyanne admitted to remaining uncertainties, acknowledging that complete security may not be achievable.
In summary, the US Export-Import Bank’s approval of a $4.7 billion loan underlines a significant investment in the TotalEnergies Mozambique LNG project, aiming to rejuvenate a halted venture due to security concerns. The loan’s announcement has invoked both optimism in financial markets and criticism from environmental advocates, encapsulating the complex dynamics surrounding energy financing amid geopolitical challenges. The successful resumption of the project hinges on ensuring worker safety and reaffirming financial commitments.
Original Source: financialpost.com
