Tag Archives: #notogasinmozambique

May 30 2025
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Why financial institutions should politely look away from ENI’s Coral North FLNGU

Update from ReCommon and Justiça Ambiental!

In January, Italian company ENI announced it would be ready for the Final Investment
Decision for its Coral North FLNG project, but now states it is still negotiating with private
banks for financing, and seems to blame the delay on the Mozambican authorities. In the
meanwhile, one investor has been sued by a civil society organization, and four private
banks have already excluded financing for the project.
Coral North FLNG, a planned floating platform to extract and liquefy gas off the coast of
Mozambique, is still looking for backers. Although Eni declared in January that it was ready
to take the FID on the project, last week, in the context of its AGM, it admitted to
shareholders that “negotiations with private financial institutions are underway”. When
asked about the reasons for the delay in closing the deal, ENI only replied that the
development plan was approved by the Mozambican authorities in April 2025, implying
they were responsible.
ENI leads work on Coral South FLNG, the only operational project in the Rovuma Basin. It is a
floating processing plant anchored in deep ocean that has been exporting LNG since
November 2022. Coral North FLNG would be a replica, gouging its claws into the sea floor
just 10 kilometres away, compounding the impacts on the ecology of the area.
Answering to the AGM questions, ENI also confirmed that “part of the project requirements
are planned to be financed through debt” and with “support from a number of Export Credit
Agencies”, as for Coral South FLNG. However, different private finance actors are moving
towards withdrawal from unconventional upstream oil and gas in order to achieve carbon
neutrality by 2050. At least four of the banks that supported the first project – BNP Paribas,
Credit Agricole, UniCredit and ABN Amro – say they are no longer interested in financing the
replica because it is not in line with their updated climate change policy.
Just over three years since the massive vessel arrived in the Cabo Delgado region, Coral
South has seen multiple cases of excessive flaring – the burning of excess extracted gas,
which results in significant carbon emissions. As a replica, Coral North would likely be
subject to similar issues. An investigation published in April by Italian civil society
organization, ReCommon, revealed that total emissions from Coral South have been
assessed at levels seven times higher than declared in the original environmental impact
assessment (EIA). Between June and December 2022 alone, flaring emissions from the Coral
South FLNG project accounted for 11.2% of Mozambique’s annual emissions, reflecting an
11.68% increase compared to 2021.Proceeding with gas development in the Rovuma Basin ignores the International Institute for
Sustainable Development findings indicating that investment in additional gas infrastructure
is incompatible with the goal of limiting global warming to 1.5°C. International Energy
Agency analysis also reveals that, in a 1.5°C scenario, existing LNG export capacity would
already be sufficient to meet current and future demand.
With gas demand declining worldwide, Coral North carries high financial risk, prompting
South Korean civil society organisation, Solutions for Our Climate (SFOC) to attempt to stop
state investment in the project. In February, Korea Gas Corporation (KOGAS) announced a
decision to invest USD 562 million in the project through equity and a loan to its subsidiary,
KG Mozambique. In March, SFOC sued KOGAS, arguing that the investment is economically
risky for South Korea, and the project would contribute significantly to climate change
impacts and therefore violate the rights of future generations to a healthy environment.
Between 2008 and April 2024, KOGAS had already invested around USD 1 billion in
Mozambique gas development, but has refused to disclose the preliminary feasibility study
(PFS) for Coral North. SFOC also has an ongoing case against KOGAS for disclosure of the
PFS.
Two other projects in the Rovuma Basin are planning significantly larger onshore processing
facilities, intending to pipe gas from wells about 50 km offshore, Mozambique LNG and
Rovuma LNG. The environmental impacts of the four gas projects together over their entire
lifetimes could be devastating for the Rovuma Basin and the west Indian ocean. The
Environmental Impact Assessment for the Coral North Project has been criticised for failing
to meet legal and scientific standards in assessing environmental and climate risks.
The Mozambique LNG project, led by French fossil giant TotalEnergies remains under
international scrutiny. The project is under force majeure since April 2021, following a
violent insurgent attack. It is now under investigation following reported allegations of a
massacre of civilians that was allegedly committed near the Afungi gas complex in mid 2021
by public security forces. Mozambique LNG shares land-use rights and some infrastructure
with the Rovuma LNG project, which is led by ExxonMobil, with ENI and China National
Petroleum Corporation as major partners. The project also remains without a final
investment decision.
The development of LNG projects in Mozambique also presents severe concerns about
erosion of sovereignty, due to the legal agreements that limit the government’s ability to
regulate these projects and capture fair revenues. Since gas exploitation began around 2010,
the industry has been linked to significant corruption-driven debt, and the government
supports its national oil company’s participation in LNG projects, creating fiscal risk without
guaranteed returns. Local communities have already lost agricultural lands and access to thesea because of the infrastructure development, and hundreds of families were required to
relocate.
Gas revenues so far amount to just over USD 200 million, of which 40% is intended for the
Sovereign Wealth Fund, which was established for stability and savings for future
generations. Last week the Mozambique Administrative Court reported numerous
irregularities in the Financial State Account for 2023 that represent an alleged
“embezzlement” of USD 33 million from Rovuma Gas revenues. In addition, Mozambican
civil society is raising concerns about the funds being allocated to social and economic
projects as provided for in the State Budget.
Developing Mozambique’s LNG industry promises only more harm – ecological destruction
and climate change impact, the destruction of people’s livelihoods, and increased
disenfranchisement and inequality. This is risky business for public and private financial
investors.
Ends

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Feb 08 2024
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Billion-dollar exposure: Investor-state dispute settlement in Mozambique’s fossil fuel sector

Published by Columbia Center on Sustainable Investment, February 2024

Salvatore and Gubeissi, ‘Billion-dollar exposure: Investor-state dispute settlement in Mozambique’s fossil fuel sector’, January 2024, Columbia Center on Sustainable Investment

Mozambique is endowed with extensive untapped natural resources, particularly gas and coal. The country’s gamble on fossil fuel-based economic growth comes with significant economic risks and crowds out investments in the country’s enormous renewable energy potential.

Mozambique faces a substantial economic risk due to its exposure to investor-state dispute settlement (ISDS) claims by foreign investors in its coal, oil, and gas sectors. The investment protections in the country’s international investment agreements and contracts, combined with ISDS, expose Mozambique to multi-billion-dollar financial liabilities. Even conservative estimations show that potential ISDS liabilities from oil and gas projects would cover almost a decade of Mozambique’s government expenditures for SDGs.

Mozambique’s international investment agreements and publicly available oil, gas, and coal contracts allow foreign investors to bypass the national judicial system and bring multi-billion-dollar ISDS claims against Mozambique. Such claims can result in significant costs for the country, and they also have a considerable chilling effect on any new public-interest regulation in areas such as health, environment, community rights or labor protections. ISDS can undermine attempts to adopt meaningful legislation to transition away from fossil fuels and achieve sustainable development goals. This regime can therefore contribute to locking the country into a high-carbon economy.

In addition, multiple stabilization clauses in the analyzed contracts lock the operations into specific legal and fiscal regimes for the duration of the contracts. Stabilization clauses protect investments from unexpected regulatory changes or new fiscal rules. If a host state does introduce such changes, stabilization clauses allow investors to demand measures or compensation that would ensure their same profitability absent such changes. These clauses thus exacerbate the limits to – and chilling effect on – states’ public interest regulation.

Mozambique and other countries can take actions to remove ISDS from their contracts and treaties, replacing the mechanism with alternative dispute resolution mechanisms. They can also take steps to terminate investment agreements in force. Home countries of Mozambique’s foreign investors have a responsibility to support such action, especially as they, themselves, remove ISDS from their own treaties.

To access this complete study, in the original English version, please visit the website:

Billion-dollar exposure: Investor-state dispute settlement in Mozambique’s fossil fuel sector
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Feb 06 2024
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Total Turmoil: Unveiling South Korea’s Stake in Mozambique’s Climate and Humanitarian Crisis

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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Dec 06 2021
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Challenging the UK government in court: Stop financing gas in Mozambique!

Friends of the Earth England, Wales and Northern Ireland (FoE EWNI) are challenging UK Export Finance’s (UKEF) decision to fund a mega gas project in Mozambique. They will be in court on 7-9 December. Below JA! explains the reasons for supporting this court case.

The $50 billion gas industry in Mozambique has created an irreversible mess before any gas has even been extracted. People have lost their livelihoods and homes, and the climate impact just from the construction phase, which has not yet been completed, has already been significant. It is crucial for the global public to know this, because corporations, pension funds, investors and even governments around the world (with taxpayers’ money), are financing these projects.

UKEF alone has agreed to finance over $1 billion of Total’s $24 billion Mozambique Liquid Natural Gas (LNG) Project, one of three already in construction.

Evicted and betrayed

Industry players are well aware of the issues the industry has created and will create in future: JA! and our partners and friends in the UK and around the world have told them several times, in letters, in parliament, at shareholder meetings and protests and now, in court.

To make way for Total’s Afungi LNG Park, which will house the support facilities for the industry, the company has displaced thousands of people from fishing and farming communities around the site, to a relocation village far from their land, and 10km inland from the sea, leaving them without livelihoods. Since the relocation plots were so small, many people opted for inadequate compensation, following a consultation process that violated several Free, Prior and Informed Consent principles. JA! works closely with communities on the ground in the gas region, and have seen how the only jobs created for locals were menial, unskilled and temporary. Communities’ complaints to Total about irregular compensation payments were waved away.

Sparking violence and death

Cabo Delgado, the site of Total’s project, is in the midst of a deadly conflict, and the gas industry has contributed to this violence. Fighting between the armies of Mozambique and Rwanda, insurgents and mercenaries has turned Cabo Delgado into a war zone. While the government and the industry insist that the cause of the violence is religious, the reality is much more complex. For years now, social tensions have grown as already-poor local communities see their province’s wealth being plundered by national, and international economic and political elites and extractive companies. All the while their complaints and basic human rights and needs are ignored and disregarded. This violence has made 800,000 people refugees, and thousands have been killed. Many of the people displaced by the industry have had to flee to other cities or nearby provinces, and do not know if they will ever be able to return to their homes. Journalists and activists have disappeared, some never to be seen again.

After a deadly attack on Palma village in March, Total claimed ‘force majeure’, pausing its project indefinitely and pulling its staff out of the area. It has since not made any compensation payments to community members and has stated that it will not be fulfilling its payment obligations to contractors, including local businesses.

Severe damage to global climate

The climate impact of the project will be extremely high and is totally misaligned with the Paris Agreement. The environmental impact assessment shows that just the construction phase of one LNG train (liquefaction facility) will increase the greenhouse gas emissions of Mozambique by up to 14%. There are plans to construct six.

The country’s record gives little assurance that gas, or any fossil fuel for that matter, will bring any benefit to the people. Even though the country has been a fossil-fuel exporter for many years, still only about 30% of the population has electricity access, and it remains one of the poorest in the world. 95% of the gas will be exported to India, France, the UK, China and Indonesia among other countries.

The Mozambique government have demonstrated before that they will not invest profits into the wealth of their country. Historically, they have provided tax relief to fossil fuel exporters and plan to do so again – costing Mozambicans around $5.3 billion. The Mozambique government cannot be relied upon to support the communities suffering at the hands of the fossil fuel industry.

What does JA! do to fight this?

JA! works closely with communities who are affected by the gas industry. We are watchdogs – watching what Total and the gas industry is doing to local people, and working with these communities to fight the industry at the grassroots level. We support communities with making complaints, maintaining communication with the industry and educating them about their rights.

We take these voices to an international level with our close partners where people around the world can hear – activists, the public, the media, the courts and those in power.  

What is the solution?

In March 2021, the UK government announced the end of overseas fossil fuel financing, but this came too late for the Mozambique LNG project, agreeing to funding in July 2020. Though it is heartening that during COP26, several countries involved in the Mozambique gas industry committed to end overseas fossil fuel financing after 2022, however, this doesn’t get them off the hook for the destruction they are already funding – they need to cancel their current financing agreements with Total and the gas industry, and with the Mozambique LNG project on hold, this is an ideal opportunity. But Total cannot just run away from what they have done. They need to make reparations for the mess they have already created.

Countries in the Global North need to pay their climate debt to Mozambique, cancel historical debts and provide sufficient climate financing for a move to alternative energy sources, renewable energy technology without intellectual property patents, and education on these technologies.

What can the UK people do to help?

You can support the court case, by sharing it on social media and following Fo

Friends of the Earth England, Wales and Northern Ireland (FoE EWNI) are challenging UK Export Finance’s (UKEF) decision to fund a mega gas project in Mozambique. They will be in court on 7-9 December. Below JA! explains the reasons for supporting this court case.

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