Afdb Backs Mozambique's Coral North LNG Expansion

(MENAFN- The Arabian Post)

Mozambique has secured a fresh boost for its offshore gas ambitions after the Board of Directors of the African Development Bank approved a $150 million senior loan for the Coral North floating liquefied natural gas project. The decision, taken on January 14, signals renewed momentum for the country's flagship gas developments and underlines lender confidence in large-scale energy infrastructure anchored in the Rovuma Basin.

The financing is earmarked for the Coral North Floating LNG facility, an offshore project designed to monetise deepwater gas resources while limiting the onshore footprint in a region that has faced security and logistical constraints. The loan strengthens a broader financing package being assembled for the project, which is expected to play a central role in Mozambique's medium-term export strategy as global gas markets remain sensitive to supply diversification.

Developed in offshore waters of northern Mozambique, Coral North builds on the operational template established by the earlier Coral South floating LNG unit, which marked the country's entry into LNG exports. The new project is planned as a standalone floating production, storage and offloading facility, enabling gas processing at sea and reducing reliance on extensive onshore installations. Industry assessments place the unit's annual liquefaction capacity in the range of several million tonnes, aligning it with mid-scale global LNG projects.

Officials familiar with the financing decision say the African Development Bank's participation reflects a calculation that Coral North offers comparatively lower execution risk than large onshore plants, while still delivering substantial foreign exchange earnings. The bank has framed the loan as part of its wider mandate to support energy access, industrial development and regional integration across Africa, while also ensuring projects meet environmental and social safeguards.

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AfDB financing lifts Coral North LNG outlook, as one senior official involved in the project put it, noting that multilateral backing often acts as a catalyst for additional lenders and export credit agencies. Such support is viewed as especially important for Mozambique, where security concerns in Cabo Delgado province and earlier project delays had weighed on investor sentiment.

The Coral North project is operated by a consortium led by Italy's Eni, alongside partners that include national and international energy companies with long-standing interests in the Rovuma Basin. Eni has promoted floating LNG as a pragmatic solution for Mozambique's offshore gas, arguing that it shortens development timelines and allows phased investment aligned with market conditions. The operator has also highlighted the potential for local content through marine services, logistics and training linked to offshore operations.

From a macroeconomic perspective, the African Development Bank estimates that LNG exports could become one of Mozambique's largest sources of government revenue over the coming decade, provided projects progress on schedule. The Coral North development is expected to generate fiscal inflows through profit gas, taxes and dividends, while also improving the country's balance of payments. Economists caution, however, that the benefits will depend on prudent fiscal management and transparent revenue allocation.

Environmental considerations remain central to lender scrutiny. Floating LNG facilities are often presented as having a smaller land footprint, but they still raise concerns related to emissions, marine ecosystems and long-term climate alignment. The African Development Bank has indicated that its financing is contingent on adherence to international environmental standards, methane management measures and community engagement commitments.

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Global LNG dynamics also shape the project's outlook. Demand growth in Asia, particularly in emerging markets seeking alternatives to coal, has supported long-term LNG investment despite price volatility. At the same time, competition from new supply in the United States, Qatar and East Africa underscores the importance of cost discipline and reliable delivery schedules. Coral North's offshore configuration is intended to help maintain competitiveness by reducing construction complexity.

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