Update from ReCommon and Justiça Ambiental!
22 May 2025
In January, Italian company ENI announced it would be ready for the Final Investment Decision for its Coral North FLNG project, but now states it is still negotiating with private banks for financing, and seems to blame the delay on the Mozambican authorities. In the meanwhile, one investor has been sued by a civil society organization, and four private banks have already excluded financing for the project.
Coral North FLNG, a planned floating platform to extract and liquefy gas off the coast of Mozambique, is still looking for backers. Although Eni declared in January that it was ready to take the FID on the project, last week, in the context of its AGM, it admitted to shareholders that “negotiations with private financial institutions are underway”
. When asked about the reasons for the delay in closing the deal, ENI only replied that the development plan was approved by the Mozambican authorities in April 2025, implying they were responsible.
ENI leads work on Coral South FLNG, the only operational project in the Rovuma Basin. It is a floating processing plant anchored in deep ocean that has been exporting LNG since November 2022. Coral North FLNG would be a replica, gouging its claws into the sea floor just 10 kilometres away, compounding the impacts on the ecology of the area.
Answering to the AGM questions, ENI also confirmed that “part of the project requirements are planned to be financed through debt” and with “support from a number of Export Credit Agencies”, as for Coral South FLNG. However, different private finance actors are moving towards withdrawal from unconventional upstream oil and gas in order to achieve carbon neutrality by 2050. At least four of the banks that supported the first project – BNP Paribas, Credit Agricole, UniCredit and ABN Amro – say they are no longer interested in financing the replica because it is not in line with their updated climate change policy.
Just over three years since the massive vessel arrived in the Cabo Delgado region, Coral South has seen multiple cases of excessive flaring – the burning of excess extracted gas, which results in significant carbon emissions. As a replica, Coral North would likely be subject to similar issues. An investigation published in April by Italian civil society organization, ReCommon, revealed that total emissions from Coral South have been assessed at levels seven times higher than declared in the original environmental impact assessment (EIA).
Between June and December 2022 alone, flaring emissions from the Coral South FLNG project accounted for 11.2% of Mozambique’s annual emissions, reflecting an 11.68% increase compared to 2021.Proceeding with gas development in the Rovuma Basin ignores the International Institute for Sustainable Development findings indicating that investment in additional gas infrastructure is incompatible with the goal of limiting global warming to 1.5°C. International Energy Agency analysis also reveals that, in a 1.5°C scenario, existing LNG export capacity would already be sufficient to meet current and future demand.
With gas demand declining worldwide, Coral North carries high financial risk, prompting South Korean civil society organisation, Solutions for Our Climate (SFOC) to attempt to stop state investment in the project. In February, Korea Gas Corporation (KOGAS) announced a decision to invest USD 562 million in the project through equity and a loan to its subsidiary, KG Mozambique. In March, SFOC sued KOGAS, arguing that the investment is economically risky for South Korea, and the project would contribute significantly to climate change impacts and therefore violate the rights of future generations to a healthy environment.
Between 2008 and April 2024, KOGAS had already invested around USD 1 billion in Mozambique gas development, but has refused to disclose the preliminary feasibility study (PFS) for Coral North. SFOC also has an ongoing case against KOGAS for disclosure of the PFS. Two other projects in the Rovuma Basin are planning significantly larger onshore processing facilities, intending to pipe gas from wells about 50 km offshore, Mozambique LNG and Rovuma LNG.
The environmental impacts of the four gas projects together over their entire lifetimes could be devastating for the Rovuma Basin and the west Indian ocean. The Environmental Impact Assessment for the Coral North Project has been criticised for failing to meet legal and scientific standards in assessing environmental and climate risks.
The Mozambique LNG project, led by French fossil giant TotalEnergies remains under international scrutiny.
The project is under force majeure since April 2021, following a violent insurgent attack. It is now under investigation following reported allegations of a massacre of civilians that was allegedly committed near the Afungi gas complex in mid 2021 by public security forces. Mozambique LNG shares land-use rights and some infrastructure with the Rovuma LNG project, which is led by ExxonMobil, with ENI and China National Petroleum Corporation as major partners. The project also remains without a final investment decision.
The development of LNG projects in Mozambique also presents severe concerns about erosion of sovereignty, due to the legal agreements that limit the government’s ability to regulate these projects and capture fair revenues. Since gas exploitation began around 2010, the industry has been linked to significant corruption-driven debt, and the government supports its national oil company’s participation in LNG projects, creating fiscal risk without guaranteed returns. Local communities have already lost agricultural lands and access to thesea because of the infrastructure development, and hundreds of families were required to relocate.
Gas revenues so far amount to just over USD 200 million, of which 40% is intended for the Sovereign Wealth Fund, which was established for stability and savings for future generations. Last week the Mozambique Administrative Court reported numerous irregularities in the Financial State Account for 2023 that represent an alleged “embezzlement” of USD 33 million from Rovuma Gas revenues. In addition, Mozambican civil society is raising concerns about the funds being allocated to social and economic projects as provided for in the State Budget.
Developing Mozambique’s LNG industry promises only more harm – ecological destruction and climate change impact, the destruction of people’s livelihoods, and increased disenfranchisement and inequality. This is risky business for public and private financial investors.
Coral North FLNG Financing_Update_22May2025.pdf
