The African Development Bank (AfDB) and the Development Bank of Southern Africa (DBSA) separately confirmed on Tuesday that they have joined a global union of financial institutions that have agreed to support the Mozambique LNG Area 1 project.
The mainland bank said it “has concluded its offer to co-finance the construction of Mozambique’s integrated liquefied natural gas (LNG) plant by signing a loan of $ 400 million for the transformation project.”
“With this signature on July 15, the Bank joins a global union of commercial banks, development finance institutions and export credit agencies to provide the necessary financing for the project,” AfDB said in a statement.
The financial close of the deal is expected towards the end of 2020, the bank said.
The South African state-owned DBSA also confirmed on Tuesday that it would provide $120 million for the project, located in northern Mozambique.
DBSA said its portion of the funding would be used for upstream and downstream project development activities needed to extract natural gas offshore and bring it ashore for processing before converting to LNG for export to various markets.
Mozambique’s onshore LNG terminal will process gas extracted from the Golfinho and Atum fields located in the Zone 1 offshore resource in the Rovuma basin.
“The project is expected to open important opportunities across the continent to export gas as an alternative energy resource,” DBSA official Mohan Vivekanandan said in a statement.
The project is considered the largest foreign direct investment in Africa to date and includes a global team of developers and energy operators, led by Total, in collaboration with Mitsui, Oil India, ONGC Videsh Limited, Bharat Petroleum, PTT Exploration, as well as ENH, the Mozambique National Oil and Gas Company.
Total announced last week that it had signed a $14.9 billion debt financing agreement for Mozambique LNG, revealing that the financing had been secured from eight export credit agencies, nineteen commercial banks and finance institutions.
Ultimately, the project should have a total capacity of around thirteen million tonnes of liquefied natural gas (LNG) per year.