U.K. and Dutch export credit agencies have withdrawn their financial commitments for French oil and gas giant TotalEnergies’ gas project in Mozambique, in an unprecedented move that marks the latest setback for the controversial project.
UK Export Finance (UKEF), a government agency, and Netherlands-based Atradius, both of which provide companies with loans, guarantees and insurance for overseas projects, had previously committed a combined $2.2 billion to TotalEnergies’ liquefied natural gas (LNG) project in northern Mozambique. The project has been linked to environmental destruction and human rights violations, and was recently sued in France for alleged links to a massacre near the LNG site.
“It’s a historic decision by the U.K. government that must be commended, because it has not been seen before that an export credit agency pulls out of a project it had previously agreed to support,” said Antoine Bouhey, campaign coordinator at Reclaim Finance, a France-based organization advocating for financial alignment with social and climate justice.
“The project is riddled with problems related to climate change, of course, as well as extremely grave allegations of human rights violations,” Bouhey told Mongabay by phone.
He added he hopes the agencies’ withdrawal will encourage other financiers to reconsider their involvement.
“What we are telling all 29 financiers still involved in the deal who may think they cannot withdraw is that [UKEF and Atradius show] there is a possibility to pull out,” Bouhey said. “They should do the only responsible thing, which is to end their commitment to this project.”
Amid speculation of potential financing shortfalls, TotalEnergies said in a statement that the LNG project remains on track despite the U.K. and Dutch funders’ exits.
The company originally secured $15.4 billion in 2020 from around 30 financiers, including export credit agencies and banks such as Standard Chartered, JPMorgan and Société Générale. TotalEnergies said the sums lost from the U.K. and Dutch withdrawals were replaced by existing partners putting in additional equity.
Peter Kyle, the U.K. secretary of state for business and trade, said in a statement that the interests of U.K. taxpayers “are best served by ending our participation in the project at this time,” citing increased security risks.
A UKEF spokesperson declined to comment on Kyle‘s statement when contacted by Mongabay. However, the agency released a new sustainability policy last year stating it has implemented the U.K. government‘s commitment to end support for overseas fossil fuel energy projects. It also emphasized UKEF‘s obligations on environmental, social and human rights standards.
Shortly after UKEF made its decision public on Dec. 5, Atradius followed suit, with the Dutch finance minister releasing a letter announcing the Netherlands would also withdraw support. Atradius had commissioned an assessment of the project‘s human rights, environmental and security risks before making its decision.
TotalEnergies recently announced it was resuming work on the LNG project following a four-year suspension of operations.
Banner image: TotalEnergies’ Mozambique LNG Afungi Park construction site. Image courtesy of Justiça Ambiental.
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