South African banking group Standard Bank confirmed on July 17 that it will contribute $485-million in debt finance to the $20-billion-plus Mozambique Liquefied Natural Gas (LNG) project, being developed by a Total-led consortium in northern Mozambique.
Standard Bank oil and gas head Dele Kuti reported that financing documents, confirming access to the senior debt, were signed on Tuesday, July 15.
The South African bank is one of about 20 international banks participating in the financing deals valued at more than $15-billion. Bloomberg reports that the African Development Bank will provide $400-million in senior loans, while the Japan Bank for International Cooperation has signed a loan agreement for as much as $3-billion for the project.
Total estimates the development will generate about $50-billion in revenue for Mozambique’s government over 25 years with the project’s capital cost exceeding Mozambique’s yearly gross domestic of about $15-billion.
Total, which holds a 26.5% stake in the development, and its partners announced in June 2019 that a final investment decision had been taken on the Mozambique LNG project, which was initially developed by Anadarko.
The other partners include ENH Rovuma Area Um (15%), Mitsui E&P Mozambique Area 1 Limited (20%), ONGC Videsh Rovuma Limited (10%), Beas Rovuma Energy Mozambique Limited (10%), BPRL Ventures Mozambique (10%) and PTTEP Mozambique Area 1 Limited (8.5%).
Financing has been secured despite concerns over an increasingly aggressive insurgency in Cabo Delgado province where the project is located, as well as recent Covid-19-related delays and a sharp fall in gas prices and demand.
The onshore Mozambique LNG terminal will process gas mined from the Golfinho and Atum fields located within the offshore Area 1 in the Rovuma basin. It will consist of two LNG trains with total yearly nameplate capacity of 12.9-million tons. The project has successfully secured in aggregate 11.1-million tonnes a year of long-term LNG sales with buyers in Asia and in Europe.
Besides contributing $485-million to the project, Standard Bank is also playing various other roles, including that of mandated lead arranger and bookrunner, as well as the covered loan facility agent and largest lender to the Export Credit Insurance Corporation of South Africa, which is providing commercial and political risk cover for South African firms involved in the project.
“Standard Bank’s participation also symbolizes its commitment to leverage on the country’s potential as a future giant producer and exporter of LNG, thereby boosting Mozambique’s growth,” Kuti said in a statement.
“This is the second LNG project to be financed by Standard Bank in Mozambique, after in 2017 it provided commercial funding for the construction of the Coral Liquefied Natural Gas Floating Platform, being the sole African Lender at Financial Close.”
By: Terrence Creamer