The United Kingdom and the Netherlands withdraw $2.2 billion in support of Total-led Mozambique LNG
Britain and the Netherlands said separately on Monday that they are canceling a total of $2.2 billion in assistance for the TotalEnergies-led Mozambique LNG project after both countries engaged companies to look into human rights issues related to the project.
After committing in 2020 to provide a $300 million loan and insurance of roughly $700 million for the $20 billion project through UK Export Finance, the British government announced that it was withdrawing its $1.15 billion support for the project.
Additionally, Total withdrew a $1.1 billion request for export insurance for the project, the Dutch government announced on Monday.
According to the Dutch finance ministry on Monday, Atradius Dutch State Business authorized $1.3 billion in export insurance through two contracts, the bigger of which was canceled at the company’s request.
TotalEnergies did not respond. A request for comment from the Mozambican government was not answered.
Construction was halted in 2021, however it resumed because
The building of Mozambique LNG was put on hold in 2021 because of an Islamist conflict. The Mozambican government’s ratification of a new budget, which the president stated he may contest, is a prerequisite for continuing Total’s development after force majeure was ended in November.
“UKEF was presented with a proposal to amend the financing terms it had originally agreed upon in preparation to restart the project,” said British Business Minister Peter Kyle in a statement.
“The hazards associated with the project have been assessed by my staff, and His Majesty’s Government believes that these risks have escalated since 2020. “It is in the best interests of UK taxpayers to terminate our involvement in the project at this time,” he continued.
Since jihadist attacks have resumed in Mozambique, Total has brought in personnel and equipment by air and sea this year for security-related reasons.
According to TOTAL, the project may proceed without UK or Dutch financing.
Using equity, TotalEnergies CEO Patrick Pouyanne informed investors in April that project partners could proceed without UK and Dutch funding.
Approximately 90% of the future gas production is commercialized through contracts with purchasers, and over 70% of the project’s funding has been obtained.
Kyle stated that UKEF will reimburse the project for any premiums that were paid. The amount was not disclosed by a UKEF representative.
On Monday, the Dutch finance minister revealed that TotalEnergies had requested in a letter dated November 24 to cancel a portion of its insurance, while the ministry was finalizing an independent human rights review.
“This means that the Netherlands will no longer be involved in financing the project,” the statement states.
Van Oord, a Dutch contractor, is still covered by a $213 million policy, according to a ministry official.
At Mozambique LNG, TotalEnergies owns a 26.5% operational stake. In addition to smaller stakeholders like India’s ONGS and Oil India, Mitsui (8031.T) of Japan and the state company ENH of Mozambique together own 20% and 15% of the project, respectively.
The project received approval for a loan of around $5 billion from the U.S. Export-Import Bank in March.
ENVIRONMENTAL AND HUMAN RIGHTS GROUPS’ CRITICISM
Last month, TotalEnergies was the target of a criminal complaint from the human rights charity ECCHR, which claimed that the company was involved in enforced disappearances and torture committed by government troops in Mozambique.
According to three people Reuters spoke with, UKEF engaged the legal company Beyond Human Rights Compliance LLP in April to look into the risks surrounding Mozambique LNG after the alleged torture was first reported in the media.
TotalEnergies has stated that there is no proof for those assertions.
Although the two companies it hired to look into the claims of torture, Clingendael and Pangea Risk, judged them to be plausible, the Dutch government stated on Monday that they were unable to determine Total’s level of knowledge or involvement.
In 2023, Friends of the Earth, an environmental group, challenged the British government’s sponsorship of the project, but the court dismissed their case.
