South Africa’s RMB commits funding for Mozambique LNG project

48431120526 351fb3823f cLeading African corporate and investment bank RMB said a liquefied natural gas (LNG) project in Mozambique is expected to receive US$15bn of financing commitments at a signing scheduled for June 2020

The Mozambique LNG project will be led by multinational French oil and gas company Total SA and is expected to generate upwards of US$40bn in revenue for the government over its lifespan.

Jonathan Ross, head of oil and gas coverage at RMB, which is part of a consortium of banks currently providing commitments to financing the project, said, “It will be a remarkable achievement in the circumstances. The backdrop could not have been worse for Total and partners to raise huge volumes of long tenor funding – the economic fallout of COVID-19 has put enormous pressure on banks’ funding and capital and has triggered an oil price crash.”

Ross noted that many projects have now been delayed, and capital expenditure has deferred in these challenging times as companies monitor costs.

“It is particularly encouraging to see rare progress for such a large and important project in what is a primary revenue generating industry in Africa.”

He commended Mozambique LNG and Total SA for continuing to invest in the project along the original timeline.

For RMB, the deal will follow on from other funding commitments in Mozambique's oil and gas sector. The bank was a co-funder and added to initial commitments for the Coral South floating liquefied natural gas (FLNG) project located offshore Mozambique, the first FLNG project in Africa.

“Supporting gas developments in Mozambique and the potentially transformational impact on Mozambique and the region remain of key strategic importance to RMB and the FirstRand Group. In addition to these projects providing a secure source of energy supply in the region, they will also provide a boost to the economy and provide employment. RMB is proud to play a role in these projects,” Ross said.

He added that RMB has also helped support SA procurement to the gas developments in Mozambique. South Africa will be a major source of goods and services for the projects, as well as a potential destination for some of the gas produced.

“These projects are also in line with FirstRand’s fossil fuels policy which has seen FirstRand moving its financing portfolio more towards natural gas, as a key transition fuel for the shift to lower carbon global energy supply,” he concluded.

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