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Project financing

KEXIM to finance Korean firms' Mozambique LNG plant project

By Dec 10, 2020 (Gmt+09:00)

2 Min read

Daewoo Engineering's LNG train construction in Nigeria
Daewoo Engineering's LNG train construction in Nigeria

The Export-Import Bank of Korea (KEXIM) will provide $500 million in project financing to South Korean companies for their $550 million construction of a liquefaction plant in Mozambique, the state-run bank said on Dec. 10.

The construction is part of a $23.5 billion liquefied natural gas project in the African country, led by French energy giant Total SE.

It is Mozambique’s first onshore LNG development, made up of the Golfinho-Atum natural gas field development within the Offshore Area 1 concession area and the construction of an onshore liquefaction plant.

Korean firms, including Daewoo Engineering & Construction Co., won the plant order worth $550 million, which is expected to create 1,300 jobs per year, alongside exports of Korean building materials, according to KEXIM. 

KEXIM’s debt financing will cover the costs of the Korean companies' purchase of building materials and other construction expenses.

The financing will be offered as two Korean shipbuilders – Hyundai Heavy Industries Co. and Samsung Heavy Industries Co. – eye the project-related LNG ship orders.

“Considering Hyundai Heavy and Samsung Heavy are now in negotiations for orders to build 17 LNG ships worth $3 billion, KEXIM expects the project financing will help Korean shipbuilders win the LNG ship orders,” said a KEXIM official.

The Mozambique LNG project, once completed, will have an annual production capacity of 12.9 million tons of LNG, equivalent to 23% of South Korea’s annual LNG imports, according to KEXIM.

“We will make preemptive efforts to boost presence in Africa’s financing market for resource development. We expect the project financing to help raise the competitiveness of Korean companies in emerging markets to secure orders,” the KEXIM official added. 

Earlier this year, Total has signed a $14.9 billion senior debt financing agreement for the Mozambique project, in the biggest project financing ever in Africa.

Mozambique LNG's project financing included direct and covered loans from eight export credit agencies, 19 commercial bank facilities, and a loan from the African Development Bank, Total said in a statement in July. KEXIM was not included in the pool.

Back in 2017, KEXIM offered project financing for a gas field development near Offshore Area 1 in Mozambique, in which Samsung Heavy and Korea Gas Corp. participated.

Last year, Daewoo Engineering clinched an order for Nigeria’s first LNG project, NLNG, to build liquefaction facilities. 

Write to Jong-Seo Park at cosmos@hankyung.com
Yeonhee Kim edited this article.
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