The African Export-Import Bank (Afreximbank), Africa’s foremost multilateral trade finance institution, is supporting the advancement of Mozambique’s energy industry and economy by committing up to US$400 million in guarantees and direct lending to the Area 1 LNG Project. The total Project is estimated to cost about US$24 billion and is set to be the largest private foreign direct investments in Africa, and one of the largest LNG projects in the world. It will play a key role in Mozambique’s economic growth and support the wider region.
The US$400m financing will be used to partially finance the project development activities required to extract natural gas offshore, its transfer to onshore processing facilities and then its conversion to LNG for export to various markets around the world.
The Mozambique Area 1 LNG project is an integrated LNG development that will initially comprise two LNG liquefaction trains – each capable of processing 6.44 million metric tonnes a year. The initial development is expected to produce more than sixteen trillion cubic feet of gas and ninety-three million barrels of condensate over the 30-year development and production period.
A key focus is for the project to be developed in an environmentally and socially sustainable manner and that it operates responsibly, protecting the environment, as well as the health and safety of the public, employees and contractors. Investment into the region will create jobs, increase the standard of living and is expected to drive long-term sustainable economic growth for the country and the region.
The US$400 million commitment to the project is in line with Afreximbank’s strategy of promoting intra-African trade as well as industrialization and export development. The guarantee is done jointly with Export Credit Insurance Corporation of South Africa SOC Limited (ECIC) which has enabled significant African contribution to the overall financing of the Project. This joint collaboration is offered under the South Africa-Africa Trade and Investment Promotion Programme (SATIPP), launched in 2018, to promote and expand trade and investments between South Africa and the rest of Africa.
In line with Afreximbank’s strategy of using partnerships to promote trade and investments in Africa, Afreximbank is once again deploying its ECA-Plus guarantee, offered under the Afreximbank Guarantee Programme (AFGAP), to support this project. The ECA-Plus Guarantee, facilitates collaboration between Afreximbank and global export credit agencies where Afreximbank uses its guarantee to share risk with ECAs in African related transactions and projects by way of co-guarantees and re-guarantees. The objective is to help create capcacity, reduce risk and unlock capital for African trade and investments.
Prof. Benedict Oramah, President of Afreximbank, said:
“We are confident the Mozambique LNG project will create opportunities for the people of the country and drive sustainable economic growth. We believe that the success of projects such as this will create a precedent through which other development projects in Africa can secure funding and gain international traction. We are delighted to be one of the key stakeholders involved in this project which will accelerate the rate of growth of intra-African trade.”