Bank of China, China Development Bank, and Industrial and Commercial Bank of China (ICBC) have participated in a multi-billion-dollar syndicated project loan for a floating liquefied natural gas (LNG) project being developed off the coast of Mozambique by Italian energy company Eni. China National Petroleum Company (CNPC) has a stake in the exploration project.

Eni ship transporting LNG. Photo: Eni.

The Coral South floating liquefied natural gas project has an estimated project cost of US$8 billion. Six subsea wells will be drilled, all connecting to the central floating production facility. A project finance loan will provide 60% of the funding for the floating LNG platform, which will be built in South Korea by a consortium comprising Samsung Heavy, Technip of France, and JGC of Japan.

The sea off the shore of Mozambique is divided into areas for the purpose of natural gas exploitation. The areas are designated to different companies, for example, Petronas operates in Areas 3 and 6, Eni in Area 4, according to the NGA Africa Project. The Coral South project is located in Eni’s region, Area 4, which is within the Rovuma Basin. The specific location, Coral Field, was discovered in May 2012.

The loan has guarantees from five export credit agencies: Export-Import Bank of China, Coface of France, Export-Import Bank of Korea (Kexim), Korea Trade Insurance Corporation (KSure), and SACE of Italy.

Among the fifteen banks in the syndicate, aside the Chinese banks, are HSBC, Credit Agricole, SMBC, ABN Amro, BNP Paribas, Korea Development Bank, Millennium BCP, Natixis, Societe Generale, Standard Bank, UBI Banca and UniCredit.

Credit Agricole is the financial advisor to Eni for the Area 4 project. Linklaters was advisor to Eni and its Area 4 partners on the loan, which is the largest project financing ever to be signed in Africa.

“This landmark transaction marks the beginning of a huge development process for Mozambique, as it starts to capitalize on the significant natural gas resources in the Rovuma Basin,” comments Daniel Tyrer, partner at Linklaters.

Eni is the operator of Area 4 through its participation in Eni East Africa (EEA), which holds a 70% participating interest in the concession, while Portugal’s Galp Energia, South Korea’s Kogas and Mozambique’s Empresa Nacional de Hidrocarbonetos (ENH), each hold a 10% stake. Eni holds 71.4% of the shares of Eni East Africa, with China National Petroleum Corp holds 28.6%. CNPC is the parent company of listed-company PetroChina.

In March 2017 Eni signed an agreement to sell 50% of its shares in EEA to ExxonMobil, which will be completed subject to satisfaction of a number of conditions precedent, including clearance from the government and other regulatory authorities.

Last October, Eni and its Area 4 partners signed an agreement with BP for the sale of the entire volume of LNG produced by Coral South for a period of over twenty years.