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The Mozambique Liquefied Natural Gas (LNG) Area 1 Project and the African Development Bank have jointly received the prestigious Global Multilateral Deal of the Year 2020 award by the print and online publication Project Finance International (PFI)

Africa gas platformMozambique is expected to become one of the world’s largest LNG exporters. (Image source: Renata (talk)/Wikimedia Commons)

The project, the single largest foreign direct investment in Africa to date with a value of more than US$24bn, will exploit Mozambique’s immense offshore natural gas reserves, which can potentially transform global energy markets. The AfDB signed an agreement for a US$400mn senior loan to finance the project in July 2020.

In signing the loan agreement, the AfDB joined a global syndication of commercial banks and export credit agencies that are providing financing. This financing includes direct loans as well as export credit agency-covered loans with 16- and 18-year tenors. The project is implemented by an international consortium of energy developers and operators led by Total as the operator of the project. It includes Mitsui, Oil India, Bharat Petroleum, PTTEP, Oil and Natural Gas Corporation (ONGC) and Mozambique's national oil and gas company, Empresa Nacional de Hidrocarbonetos (ENH).  The consortium is providing the balance of financing through equity. Financial closing on the project is expected in 2021.

Mozambique is expected to become one of the world’s largest LNG exporters. Its gas represents an important source of LNG supply diversification. The project will boost the country’s ability to meet energy demand through gas-fired electricity and will support its ambitious goal to provide universal access to energy to its citizens by 2030.

Dr Akinwumi A. Adesina, president of the AfDB, said, “The US$24bn project, which was structured at the Bank’s Africa Investment Forum, is Africa’s largest foreign direct investment. We will work with all partners to ensure that this project helps to unlock greater economic growth for Mozambique and benefits millions of people in the country, while building climate resilience.”

Fernando Balderrama, chief investment officer with the Bank, added, “The AfDB will continue to play a convening role to facilitate and assist with the suitable implementation of this investment, advocating for international best practice, small and medium enterprise development and diversification, women’s empowerment, job creation, and other critically important considerations.”