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Total raises $15.8 billion to develop Mozambique LNG project

09 Jul 2020, 03:21 pm
Financial Nigeria
Total raises $15.8 billion to develop Mozambique LNG project

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The Mozambique LNG project will include a two-train liquefaction plant with a capacity of 12.9 million tonnes per annum.

Total, a French multinational oil and gas company, has secured $15.8 billion from a consortium of 20 banks as funding for Mozambique LNG, the country’s first onshore liquefied natural gas (LNG) development. The financing contracts for development were signed last Friday, according to a statement released yesterday by FNB Mozambique – a subsidiary of FirstRand Group, the South African financial services provider – which is part of the banking consortium.

Although it is not a crude oil producing country, Mozambique is poised to be one of the world's largest LNG exporters. The southern African country holds 100 trillion cubic feet (tcf) of proved natural gas reserves, the third-largest holder in Africa after Nigeria and Algeria.   

The Mozambique LNG project located off the coast of northern Mozambique has approximately 65 tcf of recoverable natural gas and will include a two-train liquefaction plant with a capacity of 12.9 million tonnes per annum (MTPA), which can expand to 43 MTPA. The project is operated by Total – the world’s second largest LNG player – with a controlling interest of 26.5 per cent.

“FNB... intends to enter other large natural gas projects in Mozambique, just as it entered into Total’s financing, in a consortium of 20 banking institutions that granted $15.8 billion, for which the last contracts were signed last Friday,” FNB Mozambique said in the statement seen by Reuters. However, Total has not confirmed the deal.  

Total acquired the controlling interest in the Mozambique LNG project in September 2019 at a price of $3.9 billion from Anadarko Moçambique Area 1 Ltd, shortly after a $20 billion Final Investment Decision (FID) on the project was announced in June of last year. The project is expected to come into production by 2024.

Other joint venture (JV) partners in the project include ENH Rovuma Área Um, S.A. (15 per cent), Mitsui E&P Mozambique Area 1 Ltd. (20 per cent), ONGC Videsh Ltd. (10 per cent), Beas Rovuma Energy Mozambique Limited (10 per cent), BPRL Ventures Mozambique B.V. (10 per cent), and PTTEP Mozambique Area 1 Limited (8.5 per cent).

According to the African Development Bank (AfDB), the Mozambique LNG project scope entails the design, building, and operation of an integrated LNG plant, including offshore extraction, underwater pipeline, onshore processing plant, as well as ancillary support facilities. In comparison to the project’s total nameplate capacity of 12.9 MTPA, the Nigeria Liquefied Natural Gas (NLNG) plant at Bonny Island currently has an installed capacity of 22 MTPA, which is set to increase by 7.6 MTPA by 2025. In May, the NLNG signed an Engineering, Procurement and Construction (EPC) contracts with the SCD Joint Venture Consortium to increase the liquefaction trains of its plant from six to seven.

LNG, which is a natural gas fuel that has been changed into liquid state at a liquefaction plant, is considered a cleaner and cheaper fuel compared to other fossil fuels. The use of LNG can help reduce carbon dioxide (CO2) emissions and other global greenhouse gases (GHGs).

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