The UK government is seeking legal advice on withdrawing $1.15 billion in public funds from TotalEnergies’ controversial $20 billion liquefied natural gas (LNG) project in Mozambique
This was announced on Tuesday by insider sources familiar with the matter, according to a recent report by Financial Times.
The revelation is coming a few days after discussions between Mozambique’s President, Daniel Chapo, and TotalEnergies CEO Patrick Pouyanne regarding the long-delayed LNG project, as well as a previously reported $5 billion hydropower dam.
In June 2020, UK Export Finance (UKEF) pledged loans and guarantees to British banks and businesses involved in the massive Mozambican energy investment. However, the project stalled less than a year later due to escalating terrorist attacks in Cabo Delgado province, where Total was planning to build a large gas liquefaction plant for export.
Despite ongoing violence and political instability following contested elections in Mozambique last October, Total is attempting to restart the project. Earlier this year, a London court dismissed an appeal by Friends of the Earth, with the British government asserting the legality of the up to $1.15 billion in funding.
A government official expressed concern about the operational risks in Mozambique, stating:
“It’s a bloody nightmare, it’s very challenging on the ground there to figure out what’s going on. It’s also challenging to work out whether or not we can get out of it, we are really concerned about it,” they said. “It’s not the environmental concerns that are the problem, it’s the volatile situation.”
Other governments, including the US and the Netherlands, are also reassessing their involvement. The Dutch credit agency is reviewing the “security and human rights situation” before deciding whether to reinstate approximately €1 billion in export credit insurance, according to the Netherlands’ finance ministry.
Any withdrawal of funding would create a gap that Mozambique LNG would need to address, potentially leading to renegotiations of existing funding agreements and further delays.
At an investor day in October, Total chief executive Patrick Pouyanné acknowledged that some supporting countries had shifted their “stance towards financing of LNG or oil and gas projects” since 2020. But he added that countries had told the group “they are committed by contracts they sign”.
