July 16, 2020
Latham & Watkins advised the sponsors on a landmark US$20 billion financing for Mozambique’s first onshore liquefied natural gas (LNG) development. The Total-led project will initially comprise both an integrated offshore gas development and an onshore liquefaction plant, including two LNG trains with total nameplate capacity of 13.12 million tons per annum (MTPA), together with domestic gas and condensates production and storage facilities, and other associated infrastructure.
The sponsors include operator, Total SA, and co-venturers from Mozambique, Japan, Thailand and India, including Empresa Nacional de Hidrocarbonetos (ENH), Mitsui & Co., Japan Oil, Gas and Metals National Corporation (JOGMEC), PTT Exploration and Production (PTTEP), Oil and Natural Gas Corporation Limited. (ONGC), Bharat Petroleum Corporation Limited, and Oil India Limited.
Project costs will be funded by a combination of equity, pre-completion cashflows and up to US$16 billion of senior debt facilities. The senior debt comprises a mix of ECA facilities (including US-EXIM, JBIC, NEXI, UKEF, Atradius, ECIC, SACE and Thai-EXIM), commercial bank facilities, and a loan facility with the African Development Bank. The project expects to achieve financial close in the third quarter of 2020. The Mozambique LNG Project benefits from one of the world’s largest natural gas field discoveries located off of the coast of northern Mozambique, and Mozambique’s geographic location means the country is well-positioned to meet the needs of customers in the Atlantic and Asia-Pacific markets, and to tap into the growing demand for energy in the Middle East and Indian sub-continent. The project is transformational for the energy sector in Mozambique and is expected to have broader socio-economic benefits for the country.
Clement Fondufe, co-head of Latham’s Africa practice, commented: “To date, Mozambique LNG is the largest project financing transaction in Mozambique and in Africa. On a global scale, this project will put Mozambique on the path to becoming a significant player in the LNG industry and a new global source of LNG. It is truly a groundbreaking transaction. It is a testament to the depth of Latham’s global project finance practice and Africa expertise that the sponsors entrusted us with this mandate.”
The Latham & Watkins team was led by London finance partners Clement Fondufe and Craig Nethercott, together with London counsel John-Patrick Sweny, partner Chirag Sanghrajka and senior associate Alexander Buckeridge-Hocking. The team included Tokyo partner Joseph Bevash, London partner David Ziyambi, and London associates Ambrose Chan, Charlotte Hawkins, Salvador Jose, Lisa Quelch and Neha Siddiqui. San Diego partner Steven Levine and associate Seth Richardson provided advice on construction matters. Chicago counsel Sara Orr and Los Angeles counsel Joshua Marnitz advised on environmental matters, and Washington D.C. partner Les Carnegie advised on sanctions.
The Latham team was supported on Mozambican law matters by Vieira de Almeida & Associados (led by Teresa Empis Falcão) and Miranda & Associados (led by Diogo Xavier da Cunha). International law firm White & Case acted as lenders’ counsel.