Mozambique LNG gets $4.7bn U.S. ECA loan but NGO hopes persist

An LNG export project in Mozambique marred by allegations of human rights violations and predicted to be a major source of GHG emissions has obtained the financial backing of the U.S. Export Import agency for $4.7 billion, gathering harsh criticism by international NGOs as the move signals ongoing support for fossil fuel-related projects.

However, the growing commitment of export credit agencies towards green financing raises hopes that they will continue to play a role in the energy transition, despite the changed political landscape, sources told Gas Outlook.

In March, the U.S. Export Import Bank (EXIM), the export credit agency of the U.S. government, unanimously approved the second amendment of a 2019 direct loan of up to $4.7 billion “to support the export of U.S. goods and services” for the development of TotallEnergies’ Mozambique LNG.

The EXIM Bank originally agreed a $4.7 billion loan for the $20 billion project in 2020, but an Islamist insurgency in Cabo Delgado — where the liquefied natural gas facility will be built — led TotalEnergies to declare force majeure in 2021.

The project began with the discovery of a vast amount of natural gas off the north coast of Mozambique in 2010, leading to a final investment decision (FID) of $20 billion in 2019.

It involves the development of the Golfinho and Atum fields in Rovuma Offshore Area 1, which are estimated to hold around 65 trillion cubic feet of recoverable natural gas, and will include the construction a two-unit liquefaction project with expansion capacity of up to 43 million tonnes per annum (MTPA).

The strategic location of the project positions it to respond to the needs of the Atlantic and Asia-Pacific markets, in addition to exploring the growing energy demands of the Middle East and the Indian subcontinent, according to the company.

Controversy surrounding the project grew in 2024 in the wake of media investigations pointing to human rights violations by the Mozambican army operating out of the unit.

The financing “will support the engineering, procurement, and construction of the onshore LNG plant, related facilities, and offshore activities,” EXIM Bank said, adding that “the transaction, which had been on a four-year pause, will support an estimated 16,400 good-paying American jobs which support workers and families at more than 68 companies across 14 states.”

The decision comes amid lobbying by companies including McDermott, Honeywell and Baker Hughes in order to unlock the financing.

Emissions

The project’s greenhouse gas lifecycle emissions are estimated to be between 3.3 and 4.5 billion tonnes of CO2 equivalent, more than the combined annual emissions of all 27 EU member states, according to a Friends of the Earth 2021 research.

Financing support by the UK and Dutch export credit agencies is still pending.

“We are currently in talks with project sponsors and other lenders regarding the latest status of the LNG project in Mozambique, and the potential for the force majeure situation to lift,” a spokesperson for UKEF told Gas Outlook.

“The Mozambique LNG project is a human rights and environmental nightmare, but the UK and the Netherlands still have the option to take a different path,” Adam McGibbon, campaign strategist at Oil Change International, an NGO, told Gas Outlook.

“They have the power to stop this project from causing even more death and destruction by refusing to finance it.”

“The UK and Dutch governments have a clear choice: join with Trump and other far-right governments in providing taxpayer backing for this disastrous project, already linked to hundreds of tragic deaths, including a British citizen, or show courage and break with their previous administration’s foolish decision to support this project.”

Italian support

The U.S. decision follows a similar announcement by Italy’s export credit agency SACE in January.

“It could be argued that the U.S. decision followed Italy’s example” with SACE’s confirmation of its financing support happening amid a lack of “further environmental and, most importantly, social” impact evaluations, Simone Ogno, of Italian NGO ReCommon told Gas Outlook.

“These are more urgent than ever given the gravity of the situation, with the armed conflict arising between insurgents and Mozambican army, supported by Rwanda’s army,” he added.

“All parties involved are responsible for serious human rights violations against the civil population” and the conduct of the Mozambican army “could be construed as war crimes.”

Despite that, SACE issued credit guarantees worth 950 million euros.

SACE did not respond to a request for comment by Gas Outlook.

The news raises concerns over the role of export credit agencies in the funding of fossil fuel projects.

This could include SACE’s funding of Eni’s Coral North FLNG also located in Cabo Delgado, Mozambique, Ogno said.

On a wider level “export credit agencies (…) have always had a ‘gatekeeper’ role” for large corporations interests, including fossil fuel ones.”

In recent years there has been a global trend of decreasing financing of fossil fuel projects “but not as marked as climate science would require, leaving aside the social impact on populations of these projects,” he noted.

“Energy and climate policies of many ECAs” and particularly “SCE are still very weak and contain loopholes that allow the financing of fossil fuel industry.”

One example of that is the financing of an oil and gas project in Bahrain by U.S. EXIM for $500 million and of the Sakarya Phase 2 gas field development project in Turkey by SACE in December 2024, he said.

Nonetheless, “despite the Trump Administration, the trend lines show export credit agencies continue to move away from fossil fuels,” McGibbon said.

“Last week we released new research updating on progress with implementing the Clean Energy Transition Partnership (CETP) initiative, which has 40 signatories, all pledging to end international public finance for fossil fuels.”

“We demonstrate that most of the high-income signatories, which includes the UK, Canada and many EU countries are adhering to the agreement, new signatories Norway and Australia have just fulfilled their promise to end their fossil fuel finance, and other signatories such as Spain continue to improve their policies. In addition, amongst the signatory group, international public finance for fossil fuels has dropped by two-thirds (a decrease of USD 10-15 billion) since the agreement came into force.“

“The CETP initiative has been successful in bringing down fossil fuel finance, and it will make even more progress, with or without the Trump administration,” he added.

(Writing by Beatrice Bedeschi; editing by Sophie Davies)