French supermajor Total has secured as much as $16 billion in funding for its LNG project in Mozambique despite the supply glut and demand decline in the LNG market.
Among the participants in the financing are the Japan Bank for International Cooperation, which will provide as much as $3 billion for the project, and the African Development Bank, which will provide $400 million, Bloomberg reported, citing company statements.
Total’s Mozambique LNG project is the first one in the country to get a final investment decision. It will cost a total of between $20 billion and $23 billion, and will produce some 13 million tons of liquefied Natural Gas annually.
Finding sources of funding for new energy projects, both in oil and gas, has become quite challenging amid the pandemic, but the Total news suggests the long-term, if not the short-term, prospects for LNG remain bright, despite the current oversupply that has pushed LNG and gas prices so low some planned projects no longer make economic sense.
Some have been delayed, such as Exxon’s Rovuma project, which is a neighbor to Total’s Mozambique LNG. The supermajor postponed the FID on the Rovuma project in March as part of wider measures to combat the effects of the oil price crash, which spread to gas markets as well. Now, the company expects to make the final decision on the project in 2021.
Mozambique is turning into the latest hotspot for liquefied Natural Gas thanks to its abundant reserves: the Rovuma deposit alone has some 85 trillion cu ft of Natural Gas in place. The pandemic and the price rout has made the exploitation of these resources more difficult, at least for the time being, but as the world’s demand for the bridge fuel continue to rise over the long term, Mozambique may establish itself as one of the large LNG suppliers globally.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.