Project Financing - Review of Mozambique LNG | FTI Consulting

Project Financing - Review of Mozambique LNG

Africa’s Largest Project Financing Deal

Energy, Power & Products (EPP) | Economic Consulting

November 23, 2020

LNG Factory

Despite the COVID-19 outbreak and the unprecedented impacts the lockdown measures have had on global economic activity, one of the largest infrastructure financing deals to date (~$15bn) was closed.

Despite the COVID-19 outbreak and the unprecedented shocks to the global economy and to oil markets, Total, the world’s seventh-largest oil and gas company, secured approximately $15 billion1 in project financing for the development of a large Liquified Natural Gas (“LNG”) plant in Mozambique.

In this article, we present the structure of the recent Mozambique LNG project financing deal, review the main characteristics of infrastructure project financing and finally discuss the different financing alternatives.

Africa’s Largest Project Financing Deal

Mozambique LNG – development and construction

Following the discovery of large natural gas resources off the coast of northern Mozambique in 2010, a number of major LNG projects were sanctioned for development in Mozambique2. The Government of Mozambique gave the final approval for the Rovuma Basin Area 1 Mozambique LNG development plan (“Mozambique LNG”) in March 2018 which marked the beginning of the development, feasibility studies, pre-construction and construction steps of the infrastructure project (the “Construction Phase”)3.

Mozambique LNG entails the development of an integrated LNG plant which will include offshore extraction capacities, underwater pipelines, an onshore processing plant and ancillary support facilities4. The construction of Mozambique LNG began in August 20195.

Footnotes:

1: The final financing numbers vary from $14.9 billion to $16 billion.

2: The other major LNG projects sanctioned for development in the country are the Rovuma LNG project and the Coral South FLNG project.

3: Area 1 has approximately 75 trillion cubic feet (“Tcf”) of recoverable gas.

4: AFDB, November 2019, Mozambique LNG, Project Summary Notes.

5: https://www.mzlng.total.com/about-mozambique-liquefied-natural-gas-project


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