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Standard Bank signs $485m financing deal for mega Mozambique gas project

17th July 2020

By: Terence Creamer

Creamer Media Editor

     

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South African banking group Standard Bank confirmed on July 17 that it would contribute $485-million (over R8-billion) in debt finance to the $20-billion Mozambique Liquefied Natural Gas (LNG) project, being developed by a Total-led consortium in northern Mozambique.

Standard Bank oil and gas head Dele Kuti reported that financing documents, confirming access to the senior debt, were signed on Tuesday, July 15.

The South African bank is one of numerous international banks participating in the financing deal, valued at $14.9-billion.

The deal, which is the biggest-ever in Africa, includes direct and covered loans from eight export credit agencies (ECAs), 19 commercial-bank facilities and a loan from the African Development Bank.

The ECAs participating in the financing include Export Import Bank of the United-States, Japan Bank for International Corporation, Nippon Export and Investment Insurance, UK Export Finance, Servizi Assicurativi del Commercio Estero, of Italy, the Export Credit Insurance Corporation of South Africa (ECIC), Atradius Dutch State Business and the Export-Import Bank of Thailand.

Total CFO Jean-Pierre Sbraire described the signing as a "significant achievement and a major milestone for the project".

“It demonstrates the confidence placed by the financial institutions in the long-term future of LNG in Mozambique. This key milestone has been reached thanks to the dedication of the Mozambique authorities and the financial partners of the project,” Sbraire added in a statement.

Total estimates the development will generate about $50-billion in revenue for Mozambique’s government over 25 years with the project’s $20-billion capital cost exceeding Mozambique’s yearly gross domestic product of about $15-billion.

Total, which holds a 26.5% stake in the development, and its partners announced in June 2019 that a final investment decision had been taken on the Mozambique LNG project, which was initially developed by Anadarko.

The other partners include ENH Rovuma Area Um (15%), Mitsui E&P Mozambique Area 1 Limited (20%), ONGC Videsh Rovuma Limited (10%), Beas Rovuma Energy Mozambique Limited (10%), BPRL Ventures Mozambique (10%) and PTTEP Mozambique Area 1 Limited (8.5%).

Financing has been secured despite concerns over an increasingly aggressive insurgency in the Cabo Delgado province, where the project is located, as well as recent Covid-19-related delays and a sharp fall in gas prices and demand.

The onshore Mozambique LNG terminal will process gas mined from the Golfinho and Atum fields located within the offshore Area 1 resource in the Rovuma basin. It will consist of two LNG trains with a total yearly nameplate capacity of 13.1-million tons. The project has successfully secured in aggregate 11.1-million tons a year of long-term LNG sales with buyers in Asia and in Europe.

Besides contributing $485-million to the project, Standard Bank is also playing various other roles, including that of mandated lead arranger and bookrunner, as well as the covered loan facility agent and largest lender to the ECIC, which is providing commercial and political risk cover for South African firms involved in the project.

“Standard Bank's participation also symbolizes its commitment to leverage on the country's potential as a future giant producer and exporter of LNG, thereby boosting Mozambique's growth,” Kuti said in a statement.

“This is the second LNG project to be financed by Standard Bank in Mozambique, after in 2017 it provided commercial funding for the construction of the Coral Liquefied Natural Gas Floating Platform, being the sole African Lender at Financial Close.”

Edited by Creamer Media Reporter

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