French energy company Total has secured up to $16 billion to fund a key liquefied natural gas (LNG) project in Mozambique, indicating that LNG still has good long-term prospects despite the current low prices.
Natural gas is largely considered a bridge fuel in the transition to net-zero emissions. While it still releases carbon dioxide when combusted, it does so at about half the rate of coal-fired power stations, making it a reasonable replacement. Mozambique currently has substantial natural gas reserves, but getting it to market requires processing it into LNG for ship transport.
Obtaining funding for oil and gas projects is currently challenging, but Total, which also makes lubricants like slideway oil, now has the honour of making the first investment decision for an LNG project in Mozambique, which could ultimately become a leading provider of LNG in the world.
The project is expected to cost $20–23 billion, and when finished, it will produce 13 million tons of LNG each year. According to Total, this should generate revenues of about $50 billion over 25 years for Mozambique’s government.
US-based supermajor ExxonMobil is also considering an LNG project for the Rovuma deposit, which is thought to contain 85 trillion cubic feet of natural gas. It put off making a final investment decision earlier this year, when it adapted many of its operations to mitigate the effect of the oil price crash caused by the coronavirus pandemic. It now expects to make a final investment decision on its Mozambique project next year.