Page 4 - DMEA Week 27

DMEA COMMENTARY DMEA

Total-led Mozambique LNG gets

$15.7bn in financing

Very weak market conditions and an increase in insurgent activity could make it harder

for other export projects in northern Mozambique to get the financing they need

MOZAMBIQUE THE Mozambique LNG project has secured with 26.5%; two Japanese companies, Mitsui and
$15.8bn in financing, FNB Mozambique, a Japan Oil, Gas and Metals National Corp. (JOG-
WHAT: division of South African bank FirstRand, MEC), with 20%; Bharat Petroleum (India),
Mozambique LNG has announced this week. According to FNB, con- with 15%; Beas Rovuma Energy Mozambique
secured $15.8bn in tracts for the funding were signed on July 3 (a 60:40 joint venture between ONGC Videsh
financing. with a consortium of 20 banking institutions. Ltd (OVL) and Oil India Ltd (OIL), with 10%;
FirstRand’s investment banking arm Rand Mer- Mozambique’s national oil company (NOC)
WHY: chant Bank (RMB) said in May it was part of the ENH, with 10%; and PTTEP (Thailand), with
Most of it came from group, and Societe Generale has also confirmed 8.5%.
Japanese lenders, as its involvement. The partners are building their gas liquefac-
Japan will take some of Japanese lenders also played a major role, tion plant on the Afungi Peninsula within the
the project’s gas. according to Nikkei Financial Review. A group framework of the Mozambique LNG project.
of Japanese private and public-sector lenders The onshore facility will process natural gas from
WHAT NEXT: agreed to provide JPY1.5 trillion ($13.95bn) Area 1, an offshore block in the Rovuma Basin. It
Market conditions worth of financing for the Mozambique LNG will eventually have two production trains, each
present challenges to scheme, the newspaper said. France’s Total is with a capacity of 6.44mn tpy. The first train is
other export projects in leading the consortium set up to carry out the due to come on stream in 2024.
Mozambique. project, in which Japanese investors have a 20%
stake. Armed attack
According to Nikkei Financial Review, the In related news, Fenix Construction Services, a
credits will come from a syndicate that includes local third-party contractor that has contributed
state-run Japan Bank for International Co-op- to the Mozambique LNG project, reported last
eration (JBIC), as well as the country’s top three week that eight of its employees had been killed
private sector commercial banks, Mitsubishi in an armed attack by a militant Islamist group.
UFJ Financial Group (MUFG), Sumitomo Mit- Fenix, which has been working under con-
sui Financial and Mizuho Financial. Nippon tract to some of the Mozambique LNG con-
Export and Investment Insurance (NEXI), an sortium’s sub-contractors, said it had suffered
entity affiliated with the Japanese government, casualties after gunmen struck one of its vehicles
has agreed to cover default risk for the syndicate near Mocimboa da Praia, a town in Cabo Del-
and will insure the credits for the private banks. gado. Eight out of the 14 workers riding in the
JBIC is slated to make the largest contribu- vehicle died in the attack, while another three are
tion, as it will provide $3bn worth of credits to the still missing, it stated.
Mozambique LNG consortium. The remaining This is not the first action that Islamist forces
sums will come from the Japanese commercial have carried out in the area. Armed militants
banks and from the African Development Bank attacked and occupied Mocimboa da Praia,
(AfDB), a multi-lateral financial institution. which lies south of the site where Mozambique
Japan has a strong interest in ensuring the LNG is building its onshore gas liquefaction
success of the Mozambique LNG consortium. plant, in March this year. They also attacked a
Total and its partners are building a gas liquefac- convoy of workers in February 2019, injuring
tion plant that will eventually turn out more than four people.
12mn tonnes per year (tpy) of LNG, and 30% of The increase in insurgent activities in north-
the total is slated to go to Jera, a joint venture ern Mozambique over recent years could make
set up by Tokyo Electric Power Co. (TEPCO), it harder for other major export projects in the
Chubu Electric Power, Tokyo Gas and Tohoku region to secure the financing they need. Very
Electric Power. Jera’s members intend to regasify weak market conditions are of course another
the LNG so that it can be used to fuel thermal factor. ExxonMobil and Italy’s Eni want to build
power plants (TPPs). a 15.2mn tpy LNG export plant in Mozambique,
Equity in the Mozambique LNG consortium but delayed taking a final investment decision
is split between Total E&P Mozambique Area 1, (FID) until 2021 following the oil price crash.™

P4 www. NEWSBASE .com Week 27 09•July•2020