UK pulls $1.15bn loan to Mozambique gas project after climate and terror concerns | Energy industry

The UK government has taken out a controversial $1.15bn (£870m) loan for a giant gas project in Mozambique that has been blamed for fueling the climate crisis and deadly terror attacks in the region.

Britain will withdraw export funding for a liquefied natural gas project in Mozambique five years after the project sparked fierce opposition from campaigners over its impact on human rights, security and the environment, Trade Secretary Peter Kyle said.

Britain’s decision to cut support for the project comes as the project’s developer, French oil company TotalEnergies, prepares to restart the troubled plan, which has been on hold since Islamist rebels attacked a nearby town and killed more than 800 people in 2021.

On Monday, Kyle said the UK’s export credit agency, UK Export Finance (Ukef), had decided to end its involvement in the project following a “thorough assessment of the project and the interests of UK taxpayers”.

“While these decisions are never easy, the government believes that it would not be in our country’s interests for the UK to fund this project,” Kyle said.

The Mozambique support package was first agreed in 2020, just over a year after MPs on the environmental watchdog committee and Labor called for an end to the Conservative government’s support for polluting projects overseas.Undermining the UK’s climate commitments”.

Kyle in question officials assessed the risks associated with the project and concluded that these risks had increased since 2020.

Ukef had initially claimed that the project would support more than 2,000 jobs in the UK, including small businesses across the country, and could be “transformative for Mozambique’s economic and social development”. Gas from the project may also have helped heat British households through a 2019 supply deal with Centrica, which owns British Gas.

But green groups including Friends of the Earth have called for a judicial review of the government’s support for the gas project and argued that the East African country should be encouraged to invest more in renewable energy to create a sustainable green economy.

While the project has become a lightning rod for terrorism in the region, it has also been accused of violating the human rights of local communities who were displaced from the area when development work began.

Antoine Bouhey, a Reclaim Finance campaigner who supports sustainable finance, said the government’s decision showed ministers realized the project was “riddled with problems and cannot be supported”.

“It has been clear for years that this project is a disaster for local communities and the climate,” Bouhey said. He called on leading international banks Standard Chartered, Crédit Agricole and Société Generale to withdraw their support for the project, saying they “can no longer turn a blind eye to the problems and must withdraw their support immediately.”

Asad Rehman, chief executive of Friends of the Earth, said: “This Mozambique gas project is a massive carbon ticking time bomb linked to serious human rights abuses. UK taxpayer-funded support for this project should never have been given in the first place. We are now calling on other countries to follow suit and end their support for this devastating project.”

“The UK should instead support countries like Mozambique, which are on the front lines of the climate crisis, by helping them adapt to its impacts, and invest in abundant clean energy resources to provide affordable energy to the 60% of the country stuck in energy poverty,” Rehman said.

TotalEnergies has been contacted for comment.