The UK government is withdrawing £1.15bn in export finance from a liquified natural gas (LNG) project run by TotalEnergies in Mozambique.
The decision, announced by business secretary Peter Kyle in the House of Commons and first by the Financial Times, could trigger a domino effect among other financiers, climate campaigners have said.
Confirming the decision, Kyle said: "My officials have evaluated the risks around the project, and it is the view of His Majesty’s Government that these risks have increased since 2020."
The Mozambique LNG project has long been contentious. The $23bn development, one of the largest energy infrastructure schemes in Africa, had attracted export finance from the Netherlands, South Korea, Thailand, the UK and the US. It has remained stalled since 2021 following attacks by Islamist militant groups.
Key financial institutions involved include Société Générale, which acted as financial adviser, alongside Crédit Agricole, JP Morgan Chase and Standard Chartered. They sit among a wider group of Japanese and African banks, including Mizuho and Standard Bank.
TotalEnergies is currently facing a judicial investigation in France for manslaughter and failure to assist persons in danger. The company is accused of failing to protect subcontractors, and of working with the Mozambican armed forces, which themselves face allegations of systematic human rights abuses.
TotalEnergies chief executive Patrick Pouyanné said in October that the company was ready to restart construction of the project.
The UK’s original decision to back the initiative was led by then international trade secretary Liz Truss with the support of former prime minister Boris Johnson. It was challenged in court by environmental campaign group Friends of the Earth, although the Court of Appeal initially rejected the case.
Reports of the UK’s withdrawal have been welcomed by climate campaigners pressing for the government to walk away from the scheme.
Daniel Ribiero of Justiça Ambiental Mozambique said the decision showed it was not too late to correct a mistake. He argued that gas exploration in northern Mozambique has been associated with widespread human rights violations and that local communities have borne the brunt, losing livelihoods and land to the project. He urged other financiers to reflect on the reality of the scheme and put people’s rights before profits.
Adam McGibbon, campaign strategist at Oil Change International, added that continued support for the project would have breached the UK’s policy of not funding fossil fuel developments overseas. He said Starmer had now corrected this and called on remaining investors to withdraw as well.
Net Zero Investor has approached UK Export Finance (UKEF), the government agency in charge of the loan for comment.
