Japan Bank for International Cooperation has signed a loan with Mitsui & Co to support the development of the Mozambique LNG project. The US$894 million loan is co-financed with private financial institutions, with JBIC contributing US$536 million.
Though led by French oil major Total, the project has significant participation from Asia. Total E&P Mozambique Area 1 has a 26.5% stake, with Mitsui & Co together with Japan Oil, Gas and Metals National Corporation (JOGMEC) holding 20%.
Other shareholders are ONGC Videsh, a wholly owned subsidiary of Indian state-owned Oil and Natural Gas Corporation, Thailand's national oil company PTT Exploration and Production, state-owned Oil India, and Bharat PetroResources. Mozambique state-owned oil company Empresa Nacional de Hidrocarbonetos holds 15%.
They will develop the Golfinho/Atum gas field in the northernmost part of Mozambique, transport feed gas through a subsea gas pipeline to the onshore liquefaction plant to be constructed, and produce and sell liquefied natural gas (LNG) with an annual production capacity of 13.12 million tonnes.
Already in July 2020, JBIC was one of the project lenders in a US$15 billion debt package, bringing in a long list of Asian, US, European and African export credit agencies, and over 20 commercial lenders. The borrower is Abu Dhabi-based project company MOZ LNG1 Financing Company Ltd.
JBIC provided US$3 billion, part of a co-financing with the African Development Bank (AfDB), Export-Import Bank of the United States (US-Exim), UK Export Finance (UKEF), the Export-Import Bank of Thailand (Exim Thailand) and 21 private financial institutions.
The total co-financing amounts to US$14.4 billion. African Development Bank is providing US$400 million. UKEF is providing US$300 million in direct loans and US$850 million in guarantees.
Part of the co-financing loans provided by private financial institutions is insured or guaranteed by Nippon Export and Investment Insurance, UKEF, SACE of Italy, Export Credit Insurance Corporation of South Africa, and Atradius Dutch State Business.
According to JBIC, Japanese utility companies are expected to offtake approximately 30% of the LNG produced by the latest project. Thus, JBIC's support for the project is expected to contribute to securing stable supplies of LNG, which is an important energy resource for Japan.
JOGMEC was established in 2004, integrating the functions of the former Japan National Oil Corporation, which was in charge of securing a stable supply of oil and natural gas, and the former Metal Mining Agency of Japan, which was in charge of ensuring a stable supply of nonferrous metal and mineral resources.
Mozambique LNG has onshore and offshore components. It will initially comprise an integrated offshore gas development and an onshore liquefaction plant, including two LNG trains, domestic gas and condensates production and storage facilities, and other associated infrastructure. The project is expected to come into production by 2024. Total project cost is estimated at US$20 billion.