ICBC contributes to $1.26 billion syndicated loan for Rovuma Liquefied Natural Gas Project

On July 15, 2020, Moz LNG1 Financing Company Ltd — a special purpose vehicle (SPV) that is jointly owned by TOTAL E&P Mozambique Area 1, Limitada [TEPMA1] (26.5% equity stake), Mitsui E&P Mozambique Area 1 Limited (20% equity stake), ENH Rovuma Área Um, S.A. (15% equity stake), ONGC Videsh Rovuma Limited (10% equity stake), Beas Rovuma Energy Mozambique Limited (10% equity stake), BPRL Ventures Mozambique B.V. (10% equity stake), and PTTEP Mozambique Area 1 Limited (8.5% equity stake) — signed a $14.9 billion senior debt financing agreement with a group of banks and financial institutions for the Rovuma Liquefied Natural Gas Project. The project then achieved financial close on October 1, 2020. Direct lenders included JBIC ($3 billion), US Exim ($4.7 billion), Thai Eximbank ($150 million), African Development Bank ($300 million), and UKEF ($300 million). Several export credit agencies served as guarantors for these direct (bilateral) loans: NEXI, UKEF, ECIC, SACE, and Atradius. A group of commercial banks — including MUFG, Standard Chartered, Mizuho, Industrial and Commercial Bank of China (ICBC), Societe Generale, SMBC, ABSA, and IDC — also issued a $1.26 billion syndicated loan to Moz LNG1 Financing Company Ltd with a 16-year maturity. The borrower purchased a credit insurance policy from Sinosure. The project will seek to produce, liquefy and market natural gas from three reservoirs of the Mamba complex located in the Area 4 block in the offshore Rovuma Basin (locational coordinates: -10.753277, 40.798272). The project will initially comprise both an integrated offshore gas development and an onshore liquefaction plant, including two LNG trains with a total nameplate capacity of 13.12 million tons per annum (MTPA), together with domestic gas and condensates production and storage facilities, and other associated infrastructure. The first phase of the project is expected to produce more than sixteen (16) TCF of gas and ninety-three (93) million barrels of condensate over the 30-year development and production period. The site, located in northern Mozambique, is capable of housing up to ten (10) LNG trains. The project will also consist of an offshore pipeline, as well as upstream development and associated infrastructure. With the gas resource located forty (40) kms off the coast of northern Mozambique, the Project is well positioned to serve the growing demand in the Asia-Pacific and Europe gas markets. The project will sell LNG under long-term take-or-pay contracts to a diverse group of investment-grade offtakers on a DES basis. The project is set to enjoy a competitive cost advantage relative to other LNG developments due to the sheer size of the resource and the potential for multiple additional developments and associated economies of scale. The project benefits from one of the world’s largest natural gas field discoveries located off the coast of northern Mozambique, and Mozambique’s geographic location means the country is well-positioned to meet the needs of customers in the Atlantic and Asia-Pacific markets, and to tap into the growing demand for energy in the Middle East and Indian sub-continent. The project is expected to be transformational for the energy sector in Mozambique and to have broader socio-economic benefits for the country. A consortium consisting of JGC, Fluor and TechnipFMC (JFT) is the onshore EPC contractor responsible for project implementation. Mitsubishi Heavy Industries (MHI) was selected as the supplier of gas turbines and compressors for the project. Its subsidiary Mitsubishi Heavy Industries Compressor Corporation (MCO) will be responsible for the supply of liquefaction compressors, while Mitsubishi Hitachi Power Systems (MHPS) will supply the gas-turbines for the LNG plant. Airswift in a joint venture with Embrace is responsible to provide workforce for the project, while Bonatti International was selected for the construction of temporary accommodation and workstation facilities. Projectos e Estudos de Impacto Ambiental (Impacto) was involved in the preparation of the environmental impact assessment (EIA) report for the project. The Ministry of Coordination of Environmental Affairs (MICOA) of Mozambique approved the EIA for the project in June 2014. A development plan for the first phase of the project was submitted in July 2018, which was approved by the Government of Mozambique in May 2019. JFT was awarded the EPC contract in October 2019. On April 16, 2020, the Rovuma LNG construction site was reportedly shut down and quarantined due to COVID-19 infections among workers. In July 2020, the project satisfied all of the conditions precedent for the first debt drawdown of the project finance. Then, on April 26, 2021, Total (the project operator) announced that ‘[c]onsidering the evolution of the security situation in the north of the Cabo Delgado province in Mozambique, [we confirm] the withdrawal of all Mozambique LNG project personnel from the Afungi site. This situation led Total, as operator of Mozambique LNG project, to declare force majeure. In June 2021, Portuguese energy company Galp Energia, a partner in the project with a 10% equity stake, said that, due to the poor security situation caused by attacks by militants in northern Mozambique's Cabo Delgado region, it would not invest in the project until the authorities guarantee security and social stability, which ‘may take a while’. Galp's CEO told Reuters that his company did not include investments in Rovuma's onshore facilities in its net capital expenditure plan for the next five years.

Additional details

1. This project is also known as the Mozambique LNG 1 Project and the Mozambique LNG Project. The Chinese project title is 埃克森美孚/埃尼的Rovuma LNG项目 or Rovuma LNG项目 or 莫桑比克液化天然气项目. 2. Moz LNG1 Financing Company Ltd is a partially state-owned company. ENH Rovuma Área Um, S.A., which holds a 15% equity stake in the SPV, is owned by Mozambique state-owned oil company Empresa Nacional de Hidrocarbonetos (ENH). 3. In September 2019, TOTAL acquired from Occidental Petroleum Corporation the company that held a 26.5% equity stake in Moz LNG1 Financing Company Ltd. 4. The precise monetary value of ICBC’s contribution to the $1.26 billion syndicated commercial loan tranche is unknown. There are 8 known participants in the syndicated commercial loan tranche. IJGlobal estimates the value of ICBC’s contribution as $300 million. AidData relies on this estimate for the time being. However, this issue warrants further investigation. 5. In March 2020, ExxonMobil discontinued its application to receive up to $2 billion in financing for the Rovuma LNG project from the Export-Import Bank of the US (Exim). It is widely believed that the decision was taken because Exim Bank cannot authorize a loan or guarantee exceeding $25 million for which ‘the end user, lender, or debtor is the government of China’, until it reports to Congress and consults government officials, ‘as deemed appropriate by the (US) president, to assess any risks posed by the entity or the transaction to the national interest of the US’. 6. The Rovuma LNG project is based on three gas reservoirs of the Mamba complex in the Area 4 block of the Rovuma Basin. Located approximately 40km off the Cabo Delgado coast in Northern Mozambique, the Mamba gas field was discovered in October 2011. Area 4 is estimated to hold a total of 85 trillion cubic feet (tcf) of gas reserves, out of which the Rovuma LNG project targets the development and commercialization of 21.7Tcf of high-quality gas resources. 7. The Area 4 development partners secured LNG off-take commitment from their affiliated buyers for the 15.2Mtpa Rovuma LNG project in December 2018.

Number of official sources

12

Number of total sources

32