The UK government has withdrawn its export credit agency’s support for TotalEnergies’ controversial US$20bn liquefied natural gas development in Mozambique, saying it “will not advance the interests of our country”.
UK Export Finance (UKEF) agreed in 2020 to provide a guarantee of up to US$1.15bn for the LNG project, which has since been beset by civil unrest and sharply criticised by environmental campaigners.
Business and trade secretary Peter Kyle said in a statement to the House of Commons today that “my officials have evaluated the risks around the project, and it is the view of His Majesty’s Government that these risks have increased since 2020”.
“This view is based on a comprehensive assessment of the project and the interests of UK taxpayers, which are best served by ending our participation in the project at this time,” Kyle said.
“Whilst these decisions are never easy, the government believes that UK financing of this project will not advance the interests of our country.”
Kyle’s statement said the decision was made “with the agreement of the project sponsors and other participants”, and that UKEF would refund premiums already paid.
TotalEnergies’ placed the project in force majeure in 2021 after an attack by Islamist insurgents near the site.
But last month, the French energy giant announced plans to resume work on what is set to be one of the largest infrastructure projects in Africa.
UKEF’s financing for the deal came shortly before it introduced a policy prohibiting support for most fossil fuel projects.
At the time, the agency’s decision to support the Mozambique LNG project faced an ultimately unsuccessful judicial challenge from environmental campaign group Friends of the Earth, which went all the way to the Supreme Court.
Environment groups have now welcomed the business and trade department’s decision to halt the funding, and urged other countries to follow suit.
“The UK government is absolutely right to withdraw support for this deeply damaging and controversial development – and deserves credit for doing so,” said Asad Rehman, Friends of the Earth’s chief executive.
“This Mozambique gas project is a huge carbon timebomb, linked to serious human rights abuses. It should never have been given UK taxpayer-funded support in the first place.”
Oil Change International labelled the project a “human rights and environmental disaster”.
It said in a statement following UKEF’s announcement: “It’s time for the other financiers – governments like the Netherlands, the United States, Italy and Japan, and private financiers like Standard Chartered – to pull out too, and put an end to this nightmare project forever.”
TotalEnergies said in mid-2020 that a number of export credit agencies would back loans from some 20 financial institutions, chiefly commercial banks.
These included the Export-Import Bank of the United States, the Export-Import Bank of Thailand, Italy’s Sace, Japan’s Nippon Export and Investment Insurance, the Export Credit Insurance Corporation of South Africa, Atradius DSB of the Netherlands and the African Export-Import Bank (Afreximbank).
Atradius DSB is also reviewing its backing for the project, but has not yet released any findings from its internal assessment.
Earlier this year, US Exim confirmed it would still provide a US$4.7bn loan to TotalEnergies.
The company did not immediately respond to a request for comment.
