Chinese Banks Finance $1.75 billion Mozambique Floating LNG Project; Seek Role in Country’s Massive Reserves
The Industrial and Commercial Bank of China and the Bank of China have jointly issued a $1.75 billion loan to finance development of the Coral South floating liquefied natural gas (FLNG) project in Mozambique. The project will be located in the Rovuma Basin, off Mozambique’s coast. Estimates place the reserves discovered there in 2011 as the third largest in the world, after only Qatar and Australia.
Coral South is part of a carefully-managed opening of these reserves to commercial extraction. Development will be overseen by Italy’s Eni, Portugal’s Galp Energia, Korea Gas Corp, and Mozambique SOE Empresa Nacional de Hidrocarbonetos. For now, China’s involvement is limited to financing, but Chinese firms aim to become market leaders in the construction of floating LNG terminals, predicting an uptick in demand after 2020.
In the hotly-contested African gas industry, Chinese firms aim to deliver projects at cheaper costs than established competitors. It is already challenging its competitors in this area in terms of financing. Western commercial banks provided just $200 million in uncovered debt for the Mozambique project. China, on the other hand, is opening its pockets across the region. In addition to the ICBC-Bank of China loan for Coral South, China State Shipbuilding Corporation is financing a $1.2 billion FLNG project in Equatorial Guinea, and a $960 million deal in Cameroon, which will convert an LNG tanker into an FLNG terminal.