The British government has announced that it is withdrawing its financial backing for the Mozambique Liquefied Natural Gas (LNG) project led by TotalEnergies, a move that raises fresh questions about the future of one of Africa’s most ambitious energy developments. The decision ends Britain’s previous commitment of approximately $1.15 billion in loans and export credit guarantees for the massive project, which was expected to transform Mozambique into a major supplier of liquefied natural gas to markets in Europe and Asia.
In 2020, the United Kingdom pledged support for the project through UK Export Finance (UKEF), agreeing to provide a $300 million loan and nearly $700 million in insurance guarantees for British companies involved in the venture. That commitment came shortly before the UK government introduced a new policy to stop supporting overseas fossil fuel projects as part of its climate change efforts. Despite that pledge, the Mozambique LNG project had been allowed to proceed at the time because of its scale and perceived economic importance.
Construction on the $20 billion project was brought to a halt in 2021 when a violent Islamist insurgency escalated in the Cabo Delgado region in northern Mozambique, where the project is located. The security situation deteriorated, forcing TotalEnergies to declare “force majeure,” meaning it officially suspended work due to events beyond its control. Thousands of workers were evacuated, and equipment was abandoned as armed groups continued to attack nearby communities and infrastructure.
Although TotalEnergies lifted its force majeure order in November in preparation for a possible restart of the project, the company made it clear that construction would not resume until the Mozambican government approved a revised project budget and guaranteed improved security conditions. Mozambique’s president has since hinted that he may challenge or delay approval of the new budget, creating further uncertainty around the timeline.
British Business Secretary Peter Kyle said that the decision to withdraw support was based on a comprehensive reassessment of the project’s risks. According to Kyle, officials reviewed the current political, security, financial, and human rights conditions surrounding the development and concluded that the situation had worsened since the original commitment was made in 2020.
“My officials have evaluated the risks around the project, and it is the view of His Majesty’s Government that these risks have increased significantly,” Kyle stated. He added that it was in the best interest of UK taxpayers to end Britain’s participation and avoid further exposure to what he described as growing instability and uncertainty.
In recent months, security concerns in northern Mozambique have intensified once again. Jihadist-related attacks have increased, forcing TotalEnergies to move some workers and equipment in and out of the area by air and sea, rather than by road. This has complicated logistics and added substantial costs and risks to any potential restart of the project.
Despite Britain’s withdrawal, TotalEnergies has previously indicated that the project could continue even without UK and Dutch export financing. In April, TotalEnergies CEO Patrick Pouyanne told investors that the project’s partners could rely on equity funding instead of government-backed loans if necessary. He also noted that more than 70% of the project’s overall financing package has already been secured and that about 90% of the expected gas production has been sold through long-term contracts with international buyers.
TotalEnergies holds a 26.5% operating stake in the Mozambique LNG project. Other major stakeholders include Japan’s Mitsui with a 20% share and Mozambique’s state-owned oil and gas company, ENH, which holds a 15% stake. Smaller interests are held by companies such as India’s ONGC and Oil India. These partners must now decide how to respond to the changing financial landscape following the UK’s departure.
The Netherlands, which had pledged approximately $1 billion in insurance for the project through its export finance agency Atradius, is still conducting an independent human rights review. Dutch officials have said there is no clear deadline for when that assessment will be completed, leaving its final decision uncertain as well. Meanwhile, the United States Export-Import Bank has already approved a near $5 billion loan for the Mozambique LNG project, continuing American financial involvement.
The project has faced criticism from both environmental and human rights organizations. Critics argue that investing in large fossil fuel projects goes against global climate commitments and could worsen environmental damage. In addition, human rights groups have raised serious allegations about the treatment of civilians in the region. Last month, the European Center for Constitutional and Human Rights (ECCHR) filed a criminal complaint against TotalEnergies, accusing the company of being linked to abuses allegedly carried out by Mozambican security forces. These claims include accusations of torture and enforced disappearances. TotalEnergies has firmly denied any wrongdoing, stating that there is no evidence to support such allegations.
In response to mounting concerns, UKEF hired a law firm earlier this year to investigate the human rights risks connected to the project after several media reports highlighted alleged abuses. Although the legal review was still ongoing, the British government appears to have decided that the overall risk profile was too high to justify continued involvement.
A legal challenge previously brought by the environmental group Friends of the Earth, which sought to block UK support for the project, was dismissed by a London court in 2023. However, public and political pressure surrounding climate change and ethical investment continues to influence government decisions.
Britain’s withdrawal represents a significant shift in its approach to international energy financing and sends a strong signal about its priorities in balancing economic interests with environmental and human rights considerations. For Mozambique, the move is another setback in its efforts to fully develop its vast natural gas reserves, which many hoped would boost the national economy and lift communities out of poverty.
Source:Africa Publicity
