In a significant move impacting a major African energy venture, the United Kingdom government has announced it will no longer provide a substantial loan to support a massive liquefied natural gas (LNG) project in Mozambique, led by French energy giant TotalEnergies.
UK Cites National Interest in Funding Halt
The decision, confirmed on Monday, involves the withdrawal of up to $1.15 billion in financing. UK Export Finance (UKEF), the government's credit agency, made the call. Business Secretary Peter Kyle stated that while such choices are difficult, the government concluded that financing this particular project "will not advance the interests of our country."
This withdrawal comes shortly after the project consortium, in which TotalEnergies holds a 26.5 percent stake, announced in October its intention to lift a suspension on work. The project, valued at around $20 billion, was originally paused in 2021 following a devastating jihadist attack in the Cabo Delgado province that claimed approximately 800 lives.
Project's Rocky Path and Mounting Costs
TotalEnergies formally lifted the force majeure status it had declared after the violent siege. However, restarting comes with a steep price tag. The company has sought an additional $4.5 billion to cover cost overruns linked to the lengthy delay, requesting the Mozambique government cover these expenses.
The company's revised plan aims to resume production at the gas site by 2029, but this is contingent on the Mozambican authorities approving its new budget. Meanwhile, Secretary Kyle emphasised that the UK "remains committed to backing British exporters" through UKEF and to its partnership with Mozambique, focusing on sustainable growth and tackling insecurity.
Broader Context: Hopes, Accusations, and Climate Concerns
The Mozambique LNG project is central to the country's economic ambitions. Several major gas projects in the Cabo Delgado region, involving other giants like Italy's ENI and America's ExxonMobil, have the potential to transform Mozambique's fortunes. A 2024 Deloitte report suggested these developments could make the nation one of the world's top ten natural gas producers, contributing 20 percent of Africa's production by 2040.
However, the project is mired in controversy. Mozambican and international NGOs have accused TotalEnergies of holding the country "hostage" by demanding "ultra-favourable" conditions to restart work. Environmental groups have labelled such fossil fuel ventures "climate bombs," arguing they will bring little benefit to ordinary Mozambicans. This criticism is stark against World Bank data showing over 80 percent of the population lived below the poverty line of three dollars a day in 2022.
The UK's decision to pull financial support adds another layer of complexity to a project already balancing immense economic potential against severe security risks, humanitarian costs, and environmental scrutiny.
