UKEF faces further legal action over Mozambique LNG project

(Global Trade Review, London, 20 April 2022) Friends of the Earth says it will continue its fight against UKEF's decision to provide US$1.15bn of support to a natural gas project in Mozambique, after a split judgement from two UK High Court judges. In a judgement handed down last month, Justice Stuart-Smith dismissed Friends of the Earth’s claim, ruling that UKEF’s assessment of the climate change impacts of the project was lawful. But the second judge hearing the case, Justice Thornton, found that UKEF had failed to take climate impacts properly into consideration and ministers who approved the financing package did not have access to enough information to make a decision. The project under development by Total includes two offshore gas fields and a liquefaction plant with capacity of some 13 million tonnes per year. UKEF is among eight other export credit agencies and 19 commercial banks financing the project, in what Total says is the largest project finance deal ever struck in Africa. When fully operational it is expected to significantly lift Mozambique’s contribution to greenhouse gas emissions, however its proponents say that it may lead to an overall shrinking of emissions because some buyers will use the exported gas to switch from fuel sources such as coal and oil. During the course of the judicial review, arguments focused on a climate change impact report produced by UKEF which was provided to ministers who had input into the funding decision. The report relied heavily on an assessment by energy consultants Wood Mackenzie and Wood Mackenzie acknowledged that the report had severe limitations due to the difficulty of knowing where and how the exported gas would be used. An internal UKEF email described the report as “very light and [it] makes high level assumptions”. Total suspended construction of the Mozambique project and evacuated workers after insurgent attacks in early 2021, delaying the expected start of production to 2025. The company’s chief executive Patrick Pouyanne told Reuters in February that the company plans to restart construction sometime this year.