(Bloomberg) -- The US Export-Import Bank is considering funding a liquefied natural gas project led by Eni SpA off the coast of Mozambique, years after investing in an onshore facility to produce the fuel that’s been delayed by security issues and opposed by environmental groups.
Eni’s planned Coral North floating LNG plant is listed by the official export-credit agency of the US, known as Ex-Im, as a pending project. “The financing amount would be disclosed upon final board approval,” the bank said in an emailed response to questions, declining to give a timeline for the decision.
Eni didn’t immediately respond to a request for comment.
As the US ramps up efforts to engage on the African continent and compete with China for critical minerals needed for the transition to cleaner sources of energy, Ex-Im has faced greater scrutiny. An audit in May by the inspector general criticized it for not having a clear strategy for growth in the region, something the bank denied.
Ex-Im’s earlier gas investment hasn’t gone according to plan. The bank in 2020 helped finance what would become TotalEnergies SE’s Mozambique LNG project along the country’s northern coast with a $4.7 billion loan that it said at the time displaced funding efforts by China and Russia. Its own analysis also warned of security risks before it granted the loan, and violent attacks by insurgents would later halt construction at the site.
The situation for TotalEnergies’ project has since improved and it may be able to move forward with construction by the end of the year, Chief Executive Officer Patrick Pouyanne said in July. Ex-Im hasn’t yet dispersed any funds to Mozambique LNG, according to the bank.
Even though floating LNG projects are located miles offshore from potential security threats, financiers of Coral North could face scrutiny from environmental groups that have targeted oil and gas developments from Uganda to South Africa in campaigns to end the use of fossil fuels. Friends of the Earth challenged the approval of £1.5 billion ($2 billion) from UK Export Finance for Mozambique LNG. A Court of Appeal found the government didn’t breach climate rules.
Eni’s $7-billion Coral South LNG project, which began exporting fuel from its floating liquefaction plant in 2022, is in the Area 4 concession whose partners include Exxon Mobil Corp., China National Petroleum Corp., Abu Dhabi National Oil Co., Korea Gas Corp. and Mozambique’s state producer Empresa Nacional de Hidrocarbonetos E.P. The Coral North project will be developed using a similar offshore vessel.
Regarding the benefit of investing in Coral North, Ex-Im said the bank “has the distinct mission to support US jobs through financing tools that support American exporters.”
--With assistance from Matthew Hill, Alberto Brambilla and Gina Turner.
©2024 Bloomberg L.P.
