The Mozambique Liquefied Natural Gas (LNG) Area 1 Project and the African Development Bank (AfDB) have jointly received the prestigious Global Multilateral Deal of the Year 2020 award by the print and online publication Project Finance International (PFI).

The project, the single largest foreign direct investment in Africa to date with a value of over $24 billion, will exploit Mozambique’s immense offshore natural gas reserves, which can potentially transform global energy markets. The African Development Bank signed an agreement for a $400 million senior loan to finance the project in July 2020.

In signing the loan agreement, the AfDB joined a global syndication of commercial banks and export credit agencies that are providing financing. This financing includes direct loans as well as export credit agency-covered loans with 16- and 18-year tenors.

The project is implemented by an international consortium of energy developers and operators led by Total as the operator of the project. It includes Mitsui, Oil India, Bharat Petroleum, PTTEP, Oil and Natural Gas Corporation (ONGC) and Mozambique’s national oil and gas company, Empresa Nacional de Hidrocarbonetos (ENH). The consortium is providing the balance of financing through equity. Financial closing on the project is expected in 2021.

World’s largest LNG exporters

Mozambique is expected to become one of the world’s largest LNG exporters. Its gas represents an important source of LNG supply diversification. The project will boost the country’s ability to meet energy demand through gas-fired electricity and will support its ambitious goal to provide universal access to energy to its citizens by 2030.

The project can also potentially feed downstream industries that use natural gas, such as fertilizer and electricity producers. It can thus become an engine for agricultural development and trade across the Southern African Development Corporation region. 

PFI is the leading source of intelligence on global project finance. In its award announcement, it noted that the project had faced many challenges in securing financing, including the COVID-19 pandemic. 

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Source: EsiAfrica