The Export-Import Bank of the United States has approved a USD 4.7 billion loan for TotalEnergies’ LNG project in Mozambique. This development could enhance the country’s economic prospects, though significant risks from insecurity remain. Analysts suggest project resumption may occur in 2025, with potential production starting around 2030, bolstering Mozambique’s fiscal revenues and credit profile.
The Export-Import Bank of the United States (EXIM) has approved a USD 4.7 billion loan for TotalEnergies’ liquefied natural gas (LNG) project in Mozambique, pending confirmation. Fitch Ratings indicates that this funding could significantly enhance the prospects for resuming the project, which is expected to provide various positive contributions to Mozambique’s economy in the medium term. However, ongoing insecurity continues to jeopardize the development’s completion.
Mozambique’s Energy Minister, Estevão Pale, has acknowledged the potential approval of the loan, which aligns with Fitch Ratings’ prior assessment leading to a downgrade of Mozambique’s credit rating to ‘CCC’. This downgrade, from ‘CCC+’, occurred in February 2025, suggesting improved prospects for financing under the new U.S. administration. Other credit agencies involved are currently reassessing their financial commitments due to political developments in Mozambique.
The expectation is that construction on TotalEnergies’ LNG project will recommence in 2025, with the force majeure declared in 2021 possibly expiring. TotalEnergies previously forecasted the project would not be operational before 2029, but if work resumes swiftly, initial production could commence around 2030, potentially boosting Mozambique’s economic growth and fiscal revenues significantly.
The revival of the TotalEnergies project may also lead to a final investment decision on ExxonMobil’s proposed USD 30 billion LNG venture, which would enhance Mozambique’s economic growth with construction planned to begin afterward. This project is projected to double the production capacity compared to TotalEnergies, albeit starting operations post-2030.
Additionally, Eni’s Coral North facility is expected to add 3.7 million tonnes per annum in production capacity but is unlikely to begin contributing to the economy until around 2027-2028. The success of the LNG sector is vital for Mozambique, although TotalEnergies’ project faces risks concerning ongoing security threats and the stability of local political conditions.
The development of the LNG sector is critical for Mozambique’s credit profile in the medium term. However, key factors influencing the sovereign rating will likely include the government’s ability to secure external financing, manage public finances effectively, and mitigate domestic political and social tensions to foster economic normalization.
The approval of a substantial loan from EXIM for the TotalEnergies LNG project potentially heralds a positive turn for Mozambique’s economic prospects, subject to the alleviation of security concerns and political instability. With an emphasis on resuming development in 2025, the project promises to enhance export earnings and fiscal revenues. However, Mozambique’s overall credit profile will hinge on factors including access to international funding and political stability.
Original Source: clubofmozambique.com
