UK Freezes Backing for Mozambique Gas Behemoth as Security Fears Surge
The United Kingdom has declared that it will withdraw its financial support from TotalEnergies’ massive Mozambique Liquefied Natural Gas (LNG) venture—an unexpected reversal that casts new doubt on the fate of one of Africa’s most ambitious energy undertakings. The move abruptly ends Britain’s earlier pledge of roughly $1.15 billion in loans and export credit guarantees for a development once expected to elevate Mozambique into a heavyweight LNG exporter for European and Asian markets.
Back in 2020, London—through UK Export Finance (UKEF)—had committed a $300 million loan and nearly $700 million in insurance guarantees to British firms participating in the project. That approval came just before the government adopted a directive to stop financing overseas fossil-fuel initiatives as part of its climate agenda. Even so, the Mozambique LNG scheme was permitted to advance at the time because of its enormous scale and the economic opportunities it promised.
However, the $20 billion venture ground to a halt in 2021 after a violent Islamist insurgency escalated across Cabo Delgado, the northern province hosting the project. As attacks intensified and communities were overrun, TotalEnergies declared force majeure—an official suspension triggered by circumstances beyond the company’s control. Thousands of staff were flown out, machinery was left behind, and operations collapsed as insecurity worsened.
Although the company lifted its force majeure designation in November in anticipation of a possible restart, it stressed that construction would only resume once Mozambique’s authorities approved a revised budget and guaranteed stronger protection for personnel and infrastructure. President Filipe Nyusi has since hinted that he may contest or delay the updated financial framework, injecting fresh uncertainty into the timeline.
UK Business Secretary Peter Kyle announced that the withdrawal followed a sweeping reassessment of the risks surrounding the project. He explained that officials had re-examined the political volatility, security challenges, financial exposure, and human-rights concerns linked to the LNG development—and concluded that conditions had deteriorated considerably since Britain first agreed to back it in 2020.
“My team has reviewed the risk landscape, and His Majesty’s Government believes those risks have escalated sharply,” Kyle said. He emphasized that cutting ties was the most prudent decision for British taxpayers, shielding the UK from growing instability and unpredictable financial liabilities.
Security in northern Mozambique has indeed worsened in recent months. Insurgent attacks have forced TotalEnergies to rely on air and sea transport to move personnel and equipment, avoiding dangerous roads. These costly and complicated logistics have added yet another obstacle to reviving the project.
Even so, TotalEnergies has previously suggested that the development could still move forward without British or Dutch export-credit backing. In April, CEO Patrick Pouyanné told investors that the consortium could shift to equity financing if external guarantees fell through. He noted that more than 70% of the financing package is already in place and that nearly 90% of future gas output has been pre-sold under long-term contracts to overseas buyers.
TotalEnergies controls a 26.5% operating stake in the LNG initiative. Other major partners include Japan’s Mitsui with 20% and Mozambique’s state energy company ENH with 15%. Additional shares are held by Indian firms, including ONGC and Oil India. These stakeholders must now determine how to adjust their financial strategies in light of the UK’s exit.
The Netherlands—another major supporter, with a roughly $1 billion insurance pledge through its export-credit agency Atradius—is still conducting an independent human-rights assessment. Dutch authorities have given no timeline for the review’s completion. Meanwhile, the U.S. Export-Import Bank has already approved almost $5 billion in financing, signaling continued American engagement.
The project has faced mounting criticism from environmental and human-rights organizations. Activists contend that investing in large-scale fossil-fuel infrastructure undermines climate goals and risks long-lasting ecological consequences. Rights groups have also accused Mozambican security forces of abuses in the region. The European Center for Constitutional and Human Rights recently filed a criminal complaint alleging that TotalEnergies is linked—directly or indirectly—to torture, disappearances, and other violations. The company has categorically rejected those claims, stating that no evidence supports such allegations.
In response to these controversies, UKEF hired an external law firm earlier this year to scrutinize human-rights risks connected to the project after media reports surfaced about alleged abuses. Though the investigation had not yet concluded, the British government appears to have determined that the overall risk environment had become too severe to justify continued participation.
An earlier legal case—brought by Friends of the Earth to block UKEF’s support—was dismissed by a London court in 2023. But the political climate has shifted, and public pressure around climate responsibility and ethical investment continues to shape government policy.
Britain’s retreat marks a significant turning point in its approach to global energy financing and signals a broader recalibration of how it weighs economic opportunity against environmental and human-rights implications. For Mozambique, the decision is another major setback in its effort to fully harness its vast natural gas reserves—resources many hoped would generate national prosperity and uplift communities long burdened by poverty.
Source: Araba Sey
