MOZAMBIQUES fortunes are about to turnaround with a $USD8billion liquefied gas project on the horizon. The former Portuguese colony has grappled with currency volatility, Eurobond -tuna fish – debt restructures and defaults plus IMF prolonged deal negotiations on the back of unearthed $USD1.5billion debt that sent spreads on its 2023 Eurobonds to over 1,700bps to 18.5% reflecting high default risk. Mozambique is making an US$8billion investment in a Coral Floating Liquefied Natural Gas (FLNG), a step taken as a regional and global offshore natural gas producer and supplier.
The landmark energy deal is the first of its kind in the Portuguese speaking country and promises to transform Mozambique’s growth prospects.
“This game-changing transaction initiates a cycle of energy investment set to return Mozambique to growth while heralding the country’s arrival as a key global liquefied natural gas supplier,”
Paul Eardley-Taylor, Head, Oil & Gas, Southern Africa, Standard Bank.
Africa’s largest bank by asset size and presence the Standard Bank Group – SBG, and its 20% shareholder, the Industrial and Commercial Bank of China – ICBC (the largest bank in the world) are collectively the largest lenders to the project – reflecting the power of their partnership in driving African growth. Standard Bank has presence in 17 African countries, Zambia inclusive.
ICBC plays a critical role in this transaction by acting as the Pathfinder Bank, K – Sure agent, Chinese tranche agent and one of the facility account banks. Standard Bank will act as commercial facility agent, onshore account bank and security trustee in respect of the project.
“Our support of the funding of the Coral FLNG project grew out of our long-term commitment to Mozambique, consistently supporting the country’s potential as a future offshore natural gas production and export giant,” says Mr. Eardley-Taylor.
In addition to broader advisory work currently underway in East Africa, Standard Bank and ICBC’s support for the Coral FLNG project builds on a long history of oil and gas development in Mozambique, including Sasol, ROMPCO, ENH, CMG, and CMH.
Standard Bank also authored Mozambique’s landmark LNG macro-economic study informing the development of the 2014 Rovuma Basin Decree law.
The transaction gives life to Standard Bank and ICBC’s broader vision and strategy to develop East Africa as global energy production and supply hub – especially to East Asia.
Global interest in Mozambique and the region’s potential as future energy suppliers is reflected by broad international participation in the deal. Export credit agencies, including Coface (BPI), K Exim, K Sure, Sace and Sinosure, are joined in this transaction by leading global energy giants ENI, Petrochina, GALP, ENH and Kogas.
ICBC and Standard Bank believe that this deal is an important signal on Mozambique’s longer term growth prospects, especially the implications of this investment for future southern and east African energy trade and security.
“This transaction demonstrates ICBC and Standard Bank’s vision of driving Africa’s growth by attracting foreign direct investment back into Mozambique’s promising energy production and export sector,” says Mr Eardley-Taylor. Significantly, “this game changing transaction puts East Africa on the map as a global energy supplier,” he adds
ICBC has been an active growth partner in Africa having also financed $USD512million ZCCM-IH cement project in Zambia which will be the biggest plant pushing the Southern African nation in the top 4 cement production in Africa. Standard bank has also continued to stamp its footprint in Africa’s mining, power and infrastructure projects.
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