Taxpayer backed gas project faces Total failure

| 27th April 2021 |
Flickr
Criticism over UK Government backing for Total gas project in Mozambique as conflict halts scheme.

The decision to invest was short-sighted and contradicted environmental, humanitarian and security warnings. 

A huge gas project in Mozambique has been put on hold after worsening conflict in the region - placing extra pressure on the UK Government for backing the carbon intensive scheme.

French energy giant Total said it had declared force majeure and withdrawn all personnel from the liquified natural gas (LNG) production project in northern Mozambique due to the deteriorating security situation in the region.

The 20 billion US dollar (£14 billion) scheme promised to bring jobs and investment to the gas-rich area of the southern African country, but has been criticised for producing climate-damaging fossil fuels and fuelling violence.

Pollution

The move by Total to declare force majeure – unforeseeable circumstances that prevent it from fulfilling contracts – allows it to cancel contractors and raises uncertainty over the future of the project, analysts at climate and development think tanks said.

In December, the UK Government announced an end to export finance, aid funding and trade promotion for new crude oil, natural gas or coal energy projects overseas, with “very limited exceptions” for some gas-fired power plants and other schemes, as part of efforts to tackle climate change.

But earlier in the year it decided to back the Mozambique project through the UK Export Finance credit agency, with up to a billion US dollars (£720 million) of taxpayers’ money in financial support.

Environmental group Friends of the Earth has been given permission by the High Court to challenge UK support for the scheme on the grounds it is not in line with international commitments in the Paris climate agreement.

Friends of the Earth warns the project will push up Mozambique’s greenhouse gas emissions by up to 10 percent by 2022 in the construction phase alone, with much larger amounts of pollution from the end use of the fuel.

Withdraw

There are also concerns that gas projects in the region are playing a role in the conflict there, which has seen attacks by insurgents linked to the so-called Islamic State group that have killed thousands and forced many more to flee their homes.

Dozens of people are thought to have been killed last month in attacks on the coastal town of Palma, a few miles from the onshore facilities of the gas scheme led by Total.

Laurie van der Burg, researcher at the Overseas Development Institute, said: “It is bitter irony that the escalation of violence in north Mozambique, which is deeply connected to the gas developments, has led Total to decide to withdraw all personnel from the region.

“Total and governments, including the UK Government, should not have embarked on these destructive developments in the first place.

“It is highly troubling that the French oil company has let things come this far before taking this decision and that the UK Government has not yet even made the decision to withdraw.”

Investment

Jonathan Gaventa, a senior associate at climate think tank E3G, based in Maputo, Mozambique, said: “Total has indefinitely suspended work on Mozambique LNG, and the future of the project is now uncertain.

“As countries and companies adopt stronger climate targets, the gas demand projections underpinning the project are now in doubt.

“The longer the project is delayed, the lower the revenues are likely to be – if the project goes ahead at all.”

He said the security and climate risks were already clear when the finance deal for the scheme was signed off.

He urged governments and financial institutions to work with Mozambique to drive new investment and lower carbon development for the country.

Taxpayer

Rachel Kennerley, climate campaigner at Friends of the Earth, said: “With the whole enterprise looking increasingly untenable there are many reasons, both practical and political, why the plug may finally be pulled, but Government could do the right thing now and end it for good.

“Withdrawing now remains the right thing to do by the climate and for human rights.”

Anna McMorrin, shadow international development minister, said the risks were clear from day one and the Government had questions to answer over how much and what protections were in place around the public money already committed.

“The decision to invest was short-sighted, contradicted environmental, humanitarian and security warnings in the Government’s own impact assessment, and has risked UK taxpayers’ money,” she said.

“The Government must use this indefinite pause wisely – instead of continuing to lock low-income and climate-vulnerable countries into a new generation of fossil fuel reliance, the UK must seize the opportunity to fully withdraw support from the project, align with the new fossil fuel policy, and invest in green and sustainable development and transition.”

A Government spokesperson said: “The UK is committed to working with Mozambique to address the conflict’s root causes and we are supporting the humanitarian response. UKEF will continue to monitor the situation closely and ensure the UK taxpayer is protected.”

This Author

Emily Beament is the PA environment correspondent.

Donate

The Ecologist has a formidable reputation built on fifty years of investigative journalism and compelling commentary from writers across the world. Now, as we face the compound crises of climate breakdown, biodiversity collapse and social injustice, the need for rigorous, trusted and ethical journalism has never been greater. This is the moment to consolidate, connect and rise to meet the challenges of our changing world. The Ecologist is owned and published by the Resurgence Trust. Support The Resurgence Trust from as little as £1. Thank you. Donate here