The Export-Import Bank of the United States (EXIM) has authorised a direct loan of up to US$5Bn to Mozambique LNG1 Financing Company Ltd to develop and construct Mozambique LNG Area 1 project
EXIM’s financing will support US exports of goods and services for the engineering, procurement, and construction of the onshore LNG plant and related facilities.
EXIM president and chairwoman Kimberly A Reed said, “Private financing was not available for this project given its size, complexity, and risk – necessitating support from EXIM.” Ms Reed said financing could possibly have come from China and Russia for the project if EXIM had not stepped in.
At hearings held by the US Senate Committee on Banking, Housing and Urban Affairs on 27 June reauthorising the US EXIM Bank, US Senator Pat Toomey, a Republican from Pennsylvania, told chairwoman Reed that she should “seriously consider” the impact of financing the Mozambique LNG Area 1 project on the nascent US natural gas and LNG export business. “When we finance an overseas purchaser,” said Senator Toomey, “that we don’t either unwittingly or unintentionally facilitate a competitor to a domestic industry.”
In announcing the EXIM Bank loan for the project, Ms Reed said the project will be “transformative for the people of Mozambique. It is currently forecast that the life of project will have a net benefit of more than US$60Bn, which is more than four times the current gross domestic product of Mozambique. In addition, the project is obligated to provide domestic gas, which will support the expansion of electric generation capacity and the development of other industries in the country.”
As a result of EXIM’s financing, US exports will underpin the Area 1 concession of the Mozambique LNG project.
Through its acquisition of Anadarko, Occidental holds 26.5% working interest in the Mozambique LNG Area 1 project. Occidental reached a US$3.9Bn deal to sell the African assets acquired to Total.
Other investors in Mozambique LNG Area 1 include ENH Rovuma Área Um, SA (15%), Mitsui E&P Mozambique Area1 Ltd (20%), ONGC Videsh Ltd (10%), Beas Rovuma Energy Mozambique Limited (10%), BPRL Ventures Mozambique BV (10%), and PTTEP Mozambique Area 1 Limited (8.5%).