The growing list of reasons not to finance TotalEnergies’ Mozambique LNG project reflects increasing uncertainty and concerns about its viability and impact. Here are the key reasons:
Political Instability and Security Concerns: The project has been plagued by violence from Islamist insurgents in northern Mozambique, which led to TotalEnergies declaring force majeure in 2021. The ongoing security issues have made it difficult to restart the project, with further delays due to political unrest, including disputed elections in Mozambique and the presence of Rwandan troops, whose involvement has sparked international controversy.
Geopolitical Considerations: The transition to a new US administration under President Trump raises concerns that the “America First” stance may not support funding for a French-led project, particularly one without US ownership. This makes US support for the project increasingly uncertain, especially given that the US is the world’s largest LNG exporter and is looking to prioritize its own energy exports.
Human Rights and Ethical Concerns: The involvement of Rwandan forces, who have been accused of exacerbating conflict in neighboring Democratic Republic of Congo, could result in further reputational damage. With mounting pressure on Western governments to distance themselves from regimes with controversial actions, funding for the project becomes ethically problematic.
Oversupply of LNG and Declining Demand: The global LNG market is set to face an oversupply with new export capacity coming online from countries like the US, Qatar, and others, including Mozambique. Demand for LNG is not expected to grow sufficiently to match this influx of supply, especially with declining demand from key importing countries like Europe, Japan, and South Korea, which could push LNG prices down.
Uncertain Economic Benefits for Mozambique: There are concerns that the financial benefits of LNG development will primarily accrue to multinational oil and gas companies, with limited benefits for Mozambique itself. The International Institute for Sustainable Development has warned that the country may not see significant development gains from the project, and the oil and gas industry’s track record in developing nations has often led to disappointing outcomes.
Alternatives for Economic Growth in Africa: While resource-intensive economies in Sub-Saharan Africa have seen lower growth compared to other regions, the IMF highlights that many of Africa’s fastest-growing economies are not reliant on fossil fuel exports. Mozambique may be better positioned for long-term development by pursuing more sustainable and diversified economic strategies.
Given these concerns, financing the Mozambique LNG project appears increasingly risky and unsustainable for the US, UK, and Netherlands. These governments may find it more prudent to reconsider their involvement in the project, which may not deliver the promised benefits and could exacerbate regional instability.
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