$15bn raised for Moz LNG project 'remarkable'
CAPE TOWN – The raising of $15 billion (R261bn) for a liquefied natural gas (LNG) project in Mozambique was a “remarkable achievement” considering the low oil price and the economic fallout of the Covid-19 pandemic, RMB head of oil and gas coverage Jonathan Ross said on Thursday.
The Mozambique LNG project is expected to receive $15bn of financing commitments at a signing scheduled for next month – defying challenges in the financial markets and a severe pullback in investment in the oil and gas sector in sub-Saharan Africa due to the coronavirus crisis.
The project will be led by giant French oil and gas company Total SA and is expected to generate upwards of $40bn for the government over its lifespan. RMB is part of a consortium of banks providing commitments to financing the project.
Ross said in a statement that many projects were now delayed, and capital expenditure deferred, as companies scrutinise costs in these challenging times.
“It is encouraging to see rare progress for such a large and important project in what is a primary revenue generating industry in Africa,” he said.
For RMB, the deal will follow other financing commitments in the sector in Mozambique.
The bank was a co-funder and added to initial commitments for the Coral South floating liquefied natural gas project located offshore Mozambique, the first such project in Africa.
“Supporting gas developments in Mozambique and the potentially transformational impact on Mozambique and the region remain of key strategic importance to RMB and the FirstRand Group,” said Ross.
The projects could provide a secure source of energy supply in the region, boost the regional economy as well as provide employment, said Ross.
RMB had also helped support South African procurement to the gas developments in Mozambique. South Africa would be a key source of goods and services, and a potential destination for some of the gas produced.
The projects were also in line with FirstRand’s fossil fuels policy, which has seen it move its financing portfolio more towards natural gas.