The UK government has terminated a contentious $1.15bn (£870m) export finance loan for a major liquified natural gas (LNG) project in Mozambique, following years of intense criticism over its environmental impact and links to deadly violence in the region.
Project Mired in Controversy from the Start
Business Secretary Peter Kyle confirmed the decision, stating that UK Export Finance (Ukef) had conducted a comprehensive review and concluded that continued financing "will not advance the interests of our country." The support package was first agreed in 2020, despite prior calls from MPs and the Labour Party to end UK backing for overseas fossil fuel projects that undermine climate commitments.
Ukef had initially argued the project would support over 2,000 UK jobs and be transformational for Mozambique's economy. Gas from the scheme was also part of a supply deal with British Gas owner Centrica. However, the project, led by French energy giant TotalEnergies, quickly became a lightning rod for conflict.
Security Crisis and Human Rights Allegations
The development has been on hold since 2021, when a devastating Islamist insurgent attack on the nearby town of Palma killed more than 800 people. The complex's proximity to the violence highlighted severe security risks. Furthermore, the project faced serious accusations of violating the human rights of local communities who were displaced to make way for construction.
Kyle noted that officials reassessed the venture and determined the associated risks had significantly increased since the original 2020 commitment. This evaluation ultimately led to the withdrawal of taxpayer-backed support.
Campaigners Urge Wider Financial Exodus
Environmental and sustainable finance groups have welcomed the UK's move. Antoine Bouhey of Reclaim Finance stated the decision shows ministers recognised the project is "riddled with problems and cannot be supported." He called on major international banks still involved—including Standard Chartered, Crédit Agricole and Société Generale—to immediately withdraw their funding.
Asad Rehman, Chief Executive of Friends of the Earth, said: "This Mozambique gas project is a huge carbon timebomb, linked to serious human rights abuses. It should never have been given UK taxpayer-funded support in the first place." He urged other nations to follow the UK's lead and instead support Mozambique in developing its abundant renewable energy resources to tackle energy poverty.
The decision emerges as TotalEnergies prepares to restart work on the long-stalled project. The UK's withdrawal marks a significant blow to the scheme's international financial backing and sets a notable precedent for UK export finance policy regarding high-risk fossil fuel developments.
