The African Development Bank approved a $400m loan on Tuesday to support Mozambique’s ambitions to become one of the world’s largest liquified natural gas (LNG) exporters.
The long-term senior loan will help fund the construction of an integrated LNG plant and liquifaction facility in Mozambique’s LNG Area 1.
The wider Mozambique LNG Area 1 project is the single largest recipient of FDI on the continent to date, according to the AFDB, with the likes of French oil major Total on board to develop and operate the plant, alongside Mitsui and Oil India, as well as Mozambique’s national oil and gas company ENH.
Commenting on the decision, AfDB president Akinwumi Adesina said he hoped the investment would help Mozambique make the leap from a ‘developing’ to a ‘developed nation.’
“Working closely with the government of Mozambique, we can ensure that the local population reaps the benefits from its nascent natural gas value-chain, thus creating growth opportunities and widespread industrialization, while at the same time accelerating regional integration across Southern Africa,” Adesina added.
Mozambique is poised to become a major global LNG player after investors reached a final decision on the $20bn project in June.
The LNG liquefaction plant will have a production capacity of 13m tons per annum, and will be the first of several LNG projects expected to undergo development in the northern part of the country.
A gas giant is born
Exxon Mobil announced plans to make a $500m initial investment in another project, the enlargement of Mozambique’s Rovuma LNG complex, in October.
The $33bn enlargement could transform the country’s economy by creating thousands of jobs and pumping cash into a country that is struggling with debt.
If the reserves are exploited effectively, experts predict that Mozambique will have the ability to boost Africa’s share of global gas exports to around 8%, overtaking Russia to become the world’s third largest LNG exporter.
At the same time, the project could solve Africa’s energy supply problems, as it positions Mozambique as a key supplier to African countries.
With liquefied natural gas production on course to begin in 2022, significant revenues are not expected to reach state coffers before 2027.