Page 9 - GLNG Week 27

GLNG COMMENTARY GLNG

JBIC, private Japanese banks to

lend $14bn to Mozambique LNG

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

INVESTMENT A group of Japanese private and public-sector Corp. (JOGMEC), with 20%; Bharat Petro-
lenders has agreed to provide JPY1.5 trillion leum (India), with 15%; Beas Rovuma Energy
WHAT: ($13.95bn) worth of financing for the Mozam- Mozambique (a 60:40 joint venture between
Mozambique LNG has bique LNG scheme. France’s Total is leading the ONGC Videsh Ltd (OVL) and Oil India Ltd
secured $15.8bn in consortium set up to carry out the project, in (OIL), with 10%; Mozambique’s national oil
financing which Japanese investors have a 20% stake. company (NOC) ENH, with 10%; and PTTEP
According to Nikkei Financial Review, the (Thailand), with 8.5%.
WHY: credits will come from a syndicate that includes The partners are building their gas liquefac-
Most of it came from state-run Japan Bank for International Co-op- tion plant on the Afungi Peninsula within the
Japanese lenders, as eration (JBIC), as well as the country’s top three framework of the Mozambique LNG project.
Japan will take some of private sector commercial banks, Mitsubishi The onshore facility will process natural gas from
the project’s gas UFJ Financial Group (MUFG), Sumitomo Mit- Area 1, an offshore block in the Rovuma Basin. It
sui Financial and Mizuho Financial. Nippon will eventually have two production trains, each
WHAT NEXT: Export and Investment Insurance (NEXI), an with a capacity of 6.44mn tpy. The first train is
Market conditions entity affiliated with the Japanese government, due to come on stream in 2024.
present challenges to has agreed to cover default risk for the syndicate As well as Total’s $20bn Mozambique LNG
other export projects in and will insure the credits for the private banks. project, which aims to produce 12mn tpy of
Mozambique JBIC is slated to make the largest contribu- LNG, ExxonMobil is developing the 7.6mn tpy
tion, as it will provide $3bn worth of credits to the Romuva project in the African country. How-
Mozambique LNG consortium. The remaining ever, only Total is close to FID, with Exxon delay-
sums will come from the Japanese commercial ing any decision until 2021.
banks and from the African Development Bank Even though Japan’s LNG imports fell by 8.8%
(AfDB), a multi-lateral financial institution. year on year in April to 5.13mn tonnes, because
Japan has a strong interest in ensuring the of the impact of COVID-19, LNG import are of
success of the Mozambique LNG consortium, long-term strategic importance to the country’s
Nikkei Financial Review noted. Total and its energy sector.
partners are building a gas liquefaction plant
that will eventually turn out more than 12mn Armed attack
tonnes per year (tpy) of LNG, and 30% of the In related news, Fenix Construction Services, a
total is slated to go to Jera, a joint venture set up local third-party contractor that has contributed
by Tokyo Electric Power Co. (TEPCO), Chubu to the Mozambique LNG project, reported last
Electric Power, Tokyo Gas and Tohoku Electric week that eight of its employees had been killed
Power. Jera’s members intend to regasify the in an armed attack by a militant Islamist group.
LNG so that it can be used to fuel thermal power Fenix, which has been working under con-
plants (TPPs). tract to some of the Mozambique LNG con-
Japan’s confirmation of the involvement of sortium’s sub-contractors, said it had suffered
its commercial banks as well as the state-owned casualties after gunmen struck one of its vehicles
JBIC is a good sign that Total will be able to near Mocimboa da Praia, a town in Cabo Del-
secure all its financing by the end of 2020. gado. Eight out of the 14 workers riding in the
In June, Total said it had reached an agree- vehicle died in the attack, while another three are
ment with a group that included 20 lenders for still missing, it stated.
the first phase of senior debt funding of $14.4bn. This is not the first action that Islamist forces
Other banks named included Standard Bank have carried out in the area. Armed militants
Group, Societe Generale and Rand Merchant attacked and occupied Mocimboa da Praia,
Bank. which lies south of the site where Mozambique
Equity in the Mozambique LNG consor- LNG is building its onshore gas liquefaction
tium is split between Total E&P Mozambique plant, in March this year. They also attacked a
Area 1, with 26.5%; two Japanese companies, convoy of workers in February 2019, injuring
Mitsui and Japan Oil, Gas and Metals National four people. ™

Week 27 10•July•2020 www. NEWSBASE .com P9