Published by Solutions For Our Climate (SFOC), January 2024.
Kim & Oh, ‘Total Turmoil: Unveiling South Korea’s Stake in Mozambique’s Climate and Humanitarian Crisis’, January 2024, Solutions For Our Climate (SFOC)
The report identifies the participation of South Korean corporations in Mozambique’s liquified natural gas (LNG) projects and lays out the risks and flaws in the project that affect the economic feasibility and ethical correctness of the project. It is published by Solutions For Our Climate (SFOC).
SFOC has identified the significant participation of South Korean corporations in Mozambique’s LNG projects, as they play pivotal roles throughout the entire value chain of the Mozambique LNG business. With a 10% stake in the Area 4 block, Korea Gas Corporation (KOGAS) has been making substantial investments in project exploration and development. Notably, major Korean shipbuilders are actively involved in Area 1 and Area 4 projects. Samsung Heavy Industries is expected to provide offshore LNG production vessels for two of the four Mozambique gas field projects. Meanwhile, three Korean shipbuilders anticipate supplying a total of 23 LNG carriers for transporting the produced LNG volume. Six LNG carriers have already been constructed and are in use to transport LNG volumes from the Area 4 Coral Sul field, while 17 fleets for the Area 1 Mozambique LNG project await the final contract to be signed. Consequently, South Korean public financiers have become involved in the Mozambique gas projects, providing a total of USD 3.22 billion financial support to Korean companies engaged in these initiatives.
The LNG projects in Mozambique face significant risks, primarily in two key areas. Firstly, flawed resettlement processes for local communities near the LNG facilities have resulted in forced relocations, inadequate compensation, and the loss of livelihoods, especially among fishing communities. Secondly, there are substantial climate concerns associated with these projects, as they are expected to contribute significantly to greenhouse gas emissions when considering the project’s entire lifecycle. An independent report by Friends of the Earth and the New Economics Foundation estimated that the Mozambique LNG project alone could generate 3.3 to 4.5 billion tonnes of CO2 equivalents, surpassing the annual emissions of all EU countries.
The involvement of South Korean stakeholders in the LNG projects raises alarming concerns. By providing financial support for the LNG projects in Mozambique, public finance institutions have failed to adequately assess human rights, climate, environmental, and security risks associated with the projects in accordance with both international and internal guidelines. Samsung Heavy Industries faces criticism for its involvement in controversial LNG projects in Mozambique, which potentially conflicts with its sustainability initiatives and ESG commitments. Additionally, the economic feasibility of new gas projects in the Mozambique Area 4 basin, where the Korea Gas Corporation holds a 10% stake, is questionable due to factors such as low profitability, regional instability, declining gas demand, and fierce market competition.
Some key recommendations to relevant stakeholders are:
1. Public financiers should withdraw their financial backing from Mozambique gas projects and join the Clean Energy Transition Partnership (CETP) to end fossil fuel investment.
2. Public financiers should establish Human Rights, Environmental Impact, and Security Assessment processes.
3. KOGAS should consider divesting its stake in Area 4.
4. The South Korean shipbuilding industry should transition away from the fossil fuel business.
To access this complete study, in the original English version, please visit the website:
https://forourclimate.org/en/sub/data/mozambique_climate_crisis
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