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African Development Bank supports Mozambique LNG project

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LNG Industry,

African Development Bank Group has announced that its board of directors has approved a long-term senior loan of US$400 million to support the construction of an integrated LNG plant, including a liquefaction facility in Mozambique.

The Mozambique LNG Area 1 Project involves a global team of energy developers and operators, led by Total alongside Mitsui, Oil India, ONGC Videsh Ltd, Bharat Petroleum, PTT Exploration, as well as Mozambique’s national oil and gas company ENH.

Through its approval, the African Development Bank claims it has joined a global syndicate of commercial banks, development finance institutions, and export credit agencies, to jointly provide the requisite senior debt financing for the project. Financial close is expected within 1H20.

Bank Group President, Akinwumi Adesina, said: “Through its participation, the African Development Bank again demonstrates its leading role in supporting Africa’s transformation. The catalytic effect brought about by the Bank is strategically aimed to help transform Mozambique from ‘developing’ to ‘developed’ nation.

“Working closely with the Government of Mozambique, we can ensure that the local population reaps the benefits from its nascent natural gas value-chain, thus creating growth opportunities and widespread industrialisation, while at the same time accelerating regional integration across Southern Africa.”

In June 2019, the group of investors reached a final investment decision (FID) on the project, which has a price tag of over US$20 billion, thereby facilitating the commercialisation of one of the world’s most important gas discoveries in the past two decades.

According to the statement, the liquefaction facility will have a production capacity of 12.88 million tpy. The project is reportedly the first of several LNG trains expected to undergo development in the northern part of the country.

Through this approval, the Bank carries a mandate to ensure the project adheres to international transparency standards and fully complies with environmental and social requirements, in line with its Integrated Safeguards System.

In addition to this, the Bank’s participation introduces key social and economic indicators into the loan monitoring, including areas such as job creation, gender empowerment, and linkages for small businesses. With a portion of the gas allocated to the domestic market, the focus of the Bank is on supporting economic diversification and industrialisation in both Mozambique and across SADC.

According to the statement, the Bank’s involvement is consistent with its country strategy in Mozambique, which aims to leverage natural resources development to accelerate agricultural transformation and investment in sustainable infrastructure.

Furthermore, the project is also in line with three of the Bank’s ‘High 5’ strategic priorities. These are as follows: ‘Industrialize Africa’, through the anticipated industrial activity that domestic gas may generate in Mozambique and the larger Southern Africa region; ‘Light Up and Power Africa’, through the availability of gas to fuel power generation locally and regionally; and ‘Improving the Quality of Life for the People of Africa’, through the creation of thousands of jobs, local SME linkages, and gender empowerment, in addition to the positive impact on macroeconomic stability and the overall regional integration dynamics.

The project has already signed eight long-term offtake contracts with some of the world’s key LNG players, including Bharat, Centrica, China offshore state-owned oil and gas producer CNOOC, Taiwan’s CPC Corp., Electricite de France EDF, JERA, Pertamina, Shell, Tohoku Electric, and Tokyo Gas.

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