The UK government has pulled its backing for a $1.15 billion (£870 million) loan to a major gas development in Mozambique, citing environmental, human rights, and security risks. The project, led by French energy company TotalEnergies, has faced delays and controversy for several years.
Business Secretary Peter Kyle confirmed on Monday that UK Export Finance (UKEF) would withdraw support for the long-delayed liquified natural gas project. The decision comes five years after the scheme became a focal point for environmental protests and criticism over its role in destabilising Cabo Delgado province.
The project has been on hold since 2021, when Islamist militants attacked the town of Palma, killing more than 800 people and forcing Total to evacuate staff. The company has indicated plans to resume operations in the coming months following enhanced security measures in the region.
Kyle said the government’s decision followed “a comprehensive assessment of the project and the interests of UK taxpayers.” He added: “Whilst these decisions are never easy, the government believes that UK financing of this project will not advance the interests of our country.”
The UK had initially approved the loan in 2020, shortly after MPs on the environmental audit committee urged the previous Conservative government to stop funding overseas fossil fuel projects. Critics warned such support conflicted with the UK’s climate commitments.
UKEF had previously argued that the project could support more than 2,000 UK jobs, benefit small businesses, and contribute to economic development in Mozambique. A 2019 agreement with Centrica raised the possibility that gas from the project could supply British households.
Environmental and development campaigners have long criticised the scheme, highlighting its climate impact and the forced relocation of local communities. Mozambique is considered one of the countries most vulnerable to climate change, and experts have argued the nation should receive support for renewable energy development instead.
Antoine Bouhey of Reclaim Finance welcomed the UK’s move, calling the project “riddled with problems and cannot be supported.” He urged other major lenders, including Standard Chartered, Crédit Agricole, and Société Générale, to follow suit.
Friends of the Earth chief executive Asad Rehman said the decision was “long overdue” and described the gas project as “a huge carbon timebomb, linked to serious human rights abuses.” He called on other governments to withdraw backing and urged the UK to focus on climate adaptation and clean energy projects in Mozambique, where about 60% of the population still lacks access to electricity.
The withdrawal marks a significant setback for TotalEnergies and raises questions about the future of large-scale fossil fuel investments in regions affected by conflict and climate vulnerability. It also signals the UK government’s increasing willingness to align overseas finance with environmental and human rights considerations.
