London (AFP) – Britain’s government said Monday it would withdraw its financial support for TotalEnergies’ gas project in Mozambique, which the French group aims to resume after halting it over a jihadist attack. It said it would withhold up to $1.15 billion of funding for the liquified natural gas project (LNG) in the country’s restive northeastern Cabo Delgado province, which has drawn criticism from rights groups.
“Whilst these decisions are never easy, the government believes that UK financing of this project will not advance the interests of our country,” Business Secretary Peter Kyle said in a statement. A consortium led by TotalEnergies announced in October that it would lift a suspension that was imposed on the work in 2021 because of the deadly violence. The project had originally been seen to benefit Britain, but the British statement said the UK Export Finance (UKEF), a government agency, had decided to halt financing for the project. TotalEnergies gave no official comment on the news, while AFP has asked the Mozambique government for its reaction.
– 2021 jihadist attack –
The $20-billion LNG project was paused following a bloody jihadist attack that killed an estimated 800 people. TotalEnergies in October lifted the state of force majeure it had declared after the siege and sought $4.5 billion in cost overruns linked to the delay, to be covered by the Mozambique government. The company, which owns 26.5 percent of the project, has said it hopes to resume production at the gas site in 2029, subject to the African country’s approval of its new budget plan.
The UK government meanwhile “remains committed to backing British exporters, including through support from UKEF,” Kyle added Monday. “We also remain committed to our national partnership with Mozambique and building long-term respectful relationships with African countries to boost sustainable growth, tackle the climate crisis and address insecurity.”
– ‘Rights over profits’ –
Several gas projects in the area, also involving Italian group ENI and American oil giant ExxonMobil, could “make Mozambique one of the world’s top ten (natural gas) producers, contributing 20 percent of African production by 2040,” according to a 2024 report by the audit firm Deloitte.
But environmental groups have decried the projects as “climate bombs” that would bring little benefit to Mozambicans, more than 80 percent of whom lived below the poverty line of three dollars per day in 2022, according to the World Bank. Mozambican and international NGOs have accused TotalEnergies of holding Mozambique “hostage” through demands of “ultra-favourable” conditions to restart its gas project in Cabo Delgado.
Welcoming the UK withdrawal, Friends of the Earth Mozambique added: “Hopefully other financiers reflect on the reality of this project and put people’s rights over profits.”
© 2024 AFP
