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Bank to vote on $5 billion Mozambique LNG loan

Export-Import board set for key decision that would bolster US contractors

The Export-Import Bank of the US (Exim) will make a decision next month about whether to loan $5 billion to the Mozambique Liquefied Natural Gas project, originally operated by Anadarko Petroleum but soon set to be controlled by French supermajor Total.

Late last week, Exim’s board voted to notify the US Congress of its consideration of the direct loan that will support the export of US goods and services from multiple states for the LNG project on the Afungi peninsula in Cabo Delgado province.

At the conclusion of a 35-day congressional notification period on 27 September, Exim stated that the transaction “may be considered for a final vote” by its board.

Members of the public can also comment on the proposed transaction until 16 September.

If approved, the loan would support US exports of goods and services for the engineering, procurement, and construction of the onshore LNG plant and related facilities.

Houston-based McDermott is a key member of a consortium — also including Saipem and Chiyoda — that will build two liquefaction trains at Afungi with a total capacity of 12.66 million tonnes per annum. These trains will be fed with gas from the Golfinho-Atum fields in Area 1.

Exim said: “These US exports are facing direct competition from financing offered by foreign export credit agencies,”

The US lender said the $5 billion loan could support about 16,400 American jobs over the project’s five-year construction period, including employment at suppliers in Texas, Pennsylvania, Georgia, New York, Tennessee, Florida and the District of Columbia. According to Exim’s projections, the transaction could also generate more than $600 million in revenues for US taxpayers through fees and interest earned.

The borrower would be Mozambique LNG1 Financing Company, which is owned by a group of sponsors, including Anadarko, which was recently acquired by Occidental Petroleum. Oxy subsequently struck an $8 billion deal to sell on Anadarko’s African assets to Total.

Mozambique LNG1 applied for the $5 billion loan in November 2018 with Exim saying at the time it would support the export of about $4.35 billion of US equipment and services, and would also support the US administration’s Prosper Africa Initiative which aims to increase two-way trade and investment between the US and Africa.

US Secretary of Commerce Wilbur Ross, an ex officio member of Exim’s board, said: “This critical project is not only a win for (US) companies and workers… but also for the people of Mozambique.”

The loan would also help fulfil a US foreign policy priority of maintaining a US presence in the Rovuma basin.

Meanwhile, on 7 June, Exim said it had received an application for a $1.85 billion loan to support $1.8 billion of US exports also related to an LNG project in Mozambique. Although Exim did not identify the organisation that applied for the loan, it did note the capacity of the LNG project as being 15.2 million tpa, which means it must relate to Rovuma LNG project led by ExxonMobil and Italy's Eni.

Feedstock for the two 7.6 million tpa trains involved in this scheme would come from the Mamba field in Area 4.

The export-import banks of the UK, China, Japan, Korea, Germany and Italy are all thought to have been approached about lending to the Mozambique LNG and Rovuma LNG projects as well as the Eni-led Coral floating LNG scheme in Area 4.

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