Total SA’s liquefied natural gas project in Mozambique raised $15 billion of debt — about the same size as the African country’s economy — exceeding a funding target even as the virus pandemic threatens the global financial system.
Energy companies have struggled over the past few months as prices of everything from oil to natural gas slumped with the coronavirus sapping demand. While crude has staged a partial comeback, the gas market continues to be hammered by a massive oversupply. Lenders have still backed Total’s Mozambique LNG, betting on the country’s location in southern Africa for ease of export and the sheer size of gas deposits linked to the project.
It has raised $600 million more than planned, with pricing at pre-coronavirus levels, according to Katan Hirachand, managing director for energy at Societe Generale SA, which advised on the financing. Total didn’t immediately respond to a request for comment.
“To have over subscription in this environment is really phenomenal and is testament to the strength of the project,” he said, adding the financing is expected to be signed later this month.
The $23 billion project has been years in the making, with Anadarko Petroleum Corp. discovering the first major offshore gas deposit over a decade ago. The company worked through various price slumps and surges to secure long-term buyers worldwide. Occidental Petroleum Corp. then bought Anadarko and sold the project to Total last year. Total didn’t immediately respond to a request for comment.
Mozambique LNG, and others being developed by Exxon Mobil Corp. and Eni SpA, are crucial for the southern African nation, one of the poorest in the world. The World Bank estimates its gross domestic product at $14.7 billion. The country last year expected to get $95 billion of revenue over 25 years from the three projects.
