The UK government has decided to withdraw a $1.1-billion loan guarantee for TotalEnergies’ Mozambique LNG project as risks have increased and it is no longer in the interest of the UK or its taxpayer.
UK Export Finance (UKEF), the UK government’s export credit agency, pledged in 2020 a $1.15-billion financing guarantee to the $20-billion Mozambique LNG project.
“After a detailed review, the UK Government has decided to end UKEF’s participation in the project,” Peter Kyle, Secretary of State for Business and Trade, said on Monday.
The government considers that the risks to the project have increased since 2020.
“This view is based on a comprehensive assessment of the project and the interests of UK taxpayers, which are best served by ending our participation in the project at this time,” Kyle said.
“Whilst these decisions are never easy, the government believes that UK financing of this project will not advance the interests of our country.”
The withdrawal of the UK support adds another hurdle to the Mozambique LNG project, which TotalEnergies looks to restart.
Weeks ago, TotalEnergies lifted the four-year-long force majeure on the Mozambique LNG project, which was stalled due to the precarious security situation near the site of the planned export facility.
The $20-billion LNG export project was halted four years ago due to a deteriorated security situation.
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In the spring of 2021, following Islamist militant attacks in towns close to the site, TotalEnergies declared force majeure and suspended works on the project, which was Africa’s largest foreign investment when announced.
The woes for the project continued after TotalEnergies lifted the force majeure.
Last month, the European Center for Constitutional and Human Rights (ECCHR) filed a criminal complaint in France against TotalEnergies for complicity in war crimes, torture, and enforced disappearance at the Mozambique LNG site in 2021.
TotalEnergies said that it has not been formally served with this complaint by the plaintiff and that it firmly rejects all such accusations.
By Michael Kern for Oilprice.com
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