Deals

Unlock Africa's natural potential

Mozambique

Nov 17, 2017


Mozambique's Coral FLNG project set to return the country to growth

As the largest bank in Africa by assets, Standard Bank sees energy and industry growth in Africa as a significant opportunity. We are committed to driving this growth by helping clients and governments to raise capital and manage risk to advance their projects and move investment forward..
The Coral FLNG project is one such initiative and represents an important milestone in the future development of Mozambique’s significant offshore natural gas reserves. Given its size, quality of resources and geographical position, it is set to transform the country’s –and the region’s –growth prospects.

Background to the deal
The discovery of trillions of cubic feet of natural gas, located in the deep waters of the Rovuma Basin (Area 4), off the coast of Mozambique in 2012 marked the beginning of the first phase of the development of the Coral FLNG project.
The right to undertake exploration and production of hydrocarbons in the area was awarded by the government of Mozambique to the ‘Area 4 Concessionaires’, including Eni (with a 50% stake), Petrochina (20%), and GALP, ENH and Kogas (10% each).
The Coral 441 deposit (‘Coral South Field’) will be the first part of Area 4 to be developed. Production, liquefaction and monetisation of the gas will be completed by means of a purpose built Floating Liquid Natural Gas (FLNG) vessel.
Fifteen lenders provide finance across a single commercial and multiple ECA tranches. Standard Bank’s 20% stakeholder, the Industrial and Commercial Bank of China (ICBC), is a significant participant in the transaction.

Standard Bank’s and ICBC’s roles in the deal
The Coral FLNG project builds on Standard Bank’s long history of oil and gas advisory and debt work in Mozambique, including Sasol, ROMPCO, ENH, CMG, CMH; as well as authoring the landmark Mozambique LNG Macro-Economic study, which facilitated the 2014 Rovuma Basin xx law. This is delivered though close collaboration between Standard Bank’s South African, International and local African Investment Banking teams.

As the only South African bank presently involved in the deal, we will act as Commercial Lender, Uncovered Facility Agent, Onshore Security Agent, Onshore Account Bank, for the duration of the project. ICBC, with a final allocation of $550m of the Sinosure Covered Tranche, is the largest lender to the project, reflecting the power of Standard Bank and ICBC’s partnership in driving Africa’s growth.

A focus on sustainable growth
The funding of the Coral FLNG project reflects Standard Bank and ICBC’s long-term commitment to Mozambique, and our recognition of the country’s potential as future energy production and export giant. We are particularly excited about the signal that this deal sends out about Mozambique’s longer term growth prospects, and its implications for the future of southern and east African energy.
We believe that this project will be seminal in getting Mozambique back to growth –and that it will attract broader foreign direct investment back into Mozambique’s promising offshore natural gas production and export sector.

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