Despite the COVID-19 outbreak and the unprecedented impacts the lockdown measures have had on global economic activity, one of the largest infrastructure financing deals to date (~$15bn) was closed.
Despite the COVID-19 outbreak and the unprecedented shocks to the global economy and to oil markets, Total, the world’s seventh-largest oil and gas company, secured approximately $15 billion* in project financing for the development of a large Liquified Natural Gas (“LNG”) plant in Mozambique.
In this article, we present the structure of the recent Mozambique LNG project financing deal, review the main characteristics of infrastructure project financing and finally discuss the different financing alternatives.
Africa’s largest project financing deal
Mozambique LNG – development and construction
Following the discovery of large natural gas resources off the coast of northern Mozambique in 2010, a number of major LNG projects were sanctioned for development in Mozambique**. The Government of Mozambique gave the final approval for the Rovuma Basin Area 1 Mozambique LNG development plan (“Mozambique LNG”) in March 2018 which marked the beginning of the development, feasibility studies, pre-construction and construction steps of the infrastructure project (the “Construction Phase”).***
* The final financing numbers vary from $14.9 billion to $16 billion.
** The other major LNG projects sanctioned for development in the country are the Rovuma LNG project and the Coral South FLNG project.
*** Area 1 has approximately 75 trillion cubic feet (“Tcf”) of recoverable gas.