The UK government's export credit agency, UK Export Finance (UKEF), has withdrawn its offer of up to $1.15 billion in financial support for TotalEnergies' $20-billion Mozambique LNG project. This decision, announced by Secretary of State for Business and Trade Peter Kyle, follows a detailed review concluding the project's risks have increased since UKEF's initial commitment in 2020.

Decision and Rationale

The decision was based on a comprehensive assessment of the project's heightened risks and the interests of UK taxpayers. Kyle stated that UK financing would not advance the country's interests. The government reached this decision with the agreement of the project sponsors and other participants. UKEF will reimburse the premium paid by the project, ending its risk exposure.

Project Context and Risks

UKEF's original support was committed in 2020. In 2021, TotalEnergies declared force majeure after Islamist insurgent attacks near the planned construction site. Although force majeure was lifted in October, UKEF was subsequently presented with a proposal to amend the original financing terms, leading to the recent review and withdrawal.

Government Position and Reactions

Kyle stressed the government remains committed to supporting British exporters through UKEF and to its partnership with Mozambique, aiming to build relationships that boost sustainable growth and address climate and security issues. The decision was praised by non-profit organizations. Reclaim Finance called it a recognition that the project is "riddled with problems," urging other lenders to withdraw. Friends of the Earth described the project as deeply damaging and controversial, urging other countries to end their support.

Other Project Financing

Other major lenders include the US Export-Import Bank, which approved a loan of up to $4.7 billion earlier this year to support the export of US goods and services for the project. TotalEnergies was approached for comment on UKEF's withdrawal.