US Approves $1.5bn Insurance for Mozambique Gas Project
The board of directors at the US International Development Finance Corp (DFC) has approved $1.5bn in political risk insurance for the development of gas in Area 4 of Mozambique's offshore Rovuma basin.
The DFC announced the approval on September 9, without specifying which Rovuma gas project would be covered by the insurance. But the US embassy in Maputo clarified on September 10 that it was Area 4, where development is led by ExxonMobil and Italy's Eni.
The project will boost Mozambique's GDP by an average of $15bn/yr, "positioning one of the world's poorest countries to achieve lasting, long-term economic growth," the DFC said. Its insurance will cover development, construction and operation of an onshore liquefaction plant and supporting facilities, it said.
Area 4 contains over 85 trillion m3 of gas, and is due to host the 15.2mn mt/yr Rovuma LNG project. The project partners had planned to take a final investment decision (FID) on the scheme this year, but have delayed this step until 2021, due to weak market conditions. ExxonMobil is set to oversee the construction and operation of Rovuma LNG's gas liquefaction and related facilities, while Eni has agreed to manage upstream development.
The Italian major is also developing the 3.4mn mt/yr Coral South FLNG project at Area 4. An FID was reached on Coral South in 2017 and first gas is scheduled for 2022.
Gas-rich northern Mozambique has been in the grip of a jihadist insurgency since 2017, posing a risk to the various export projects underway there. Attacks have so far claimed at least 1,500 lives and displaced more than 250,000 people. France's Total, operator of the 13.1mn mt/yr Mozambique LNG development, recently formed a security pact with the Mozambique government to counter this threat.
The DFC also approved a $200mn loan to local power utility Central Termica de Temane for the construction and operation of a 420-MW gas-fired power plant, as well as a 25-km interconnection line. The station will transmit electricity to consumers via a 560-km transmission line, which secured funding last year and is due to go live by 2023. It will diversify Mozambique's energy mix, lower the cost of electricity and utilise domestic gas supply, the DFC said.