Japanese Bank Criticized for Financing Mozambique LNG Project Blamed for Displacement

A village in the Afungi Peninsula in Palma District, Cabo Delgado Province. Credit: Justiça Ambiental

By Maina Waruru
NAIROBI, Dec 23 2024 (IPS)

Climate and environmental activists from Japan have criticized the Japan Bank for International Cooperation (JBIC) for financing the controversial Mozambique Liquefied Natural Gas (LNG) project to the tune of USD 3 billion in a loan signed in July.

The project has been associated with the displacement of thousands of people and is in violation of Japan’s G7 commitment to end direct public support for overseas fossil fuel projects.

The bank’s action is also projected to have far-reaching effects on climate and the environment, further negatively impacting the livelihoods of communities in the restive Cabo Delgado province in the north of the county, a report says.

Conflict in the region has been linked to insurgency and human rights abuses by the country’s security forces.

In the report “Faces of Impact: How JBIC and Japan’s LNG Financing Harm Communities and the Planet” by Friends of Earth (FOE), Japan activists find that in Mozambique, at least 550 families were displaced for the Rovuma LNG project, exposing them to risk as it is situated in a conflict-torn region and has been linked to human rights abuses of civilians.

The project is further backed by the Japanese bank through a loan of U$536 million to Mitsui, a Japanese corporate group, also one of the owners of the project, and which describes the project as “one of the largest natural gas reserves discovered anywhere in the world in recent years.”

The money will finance the development and production of LNG in a region where thousands of civilians have been displaced by both violence and the gas development activities since 2012, some without compensation for their land.

The LNG project intends to extract 65 trillion cubic feet of natural gas, which will be done offshore in the Rovuma Basin and piped to an onshore LNG processing plant on the Afungi Peninsula.

“The project began its onshore construction activities in 2019 but was suspended in 2021 as a result of violent conflict. It has not officially resumed, but some of its activities have been restarted since 2023,” the report explains. The insurgency remains active, and human rights infringements resulting from the project activities remain unresolved, it further cautions.

“The Mozambique LNG project is linked to violent conflict, has resulted in social injustices on Mozambican citizens, and is a potential source of massive carbon emissions. It has already cost the country productive lands, local economies, and valuable natural areas,” it warns.

Should the project proceed as planned and despite becoming the biggest gas project in Africa, it will deliver low revenues to the host country and place the country at risk of liability if it fails, the report opines.

Owned by a consortium of seven companies, including the Mozambique state company Empresa Nacional de Hidrocarbonetos (ENH). All except ENH control their shares through offshore companies, with TotalEnergies being the majority owner and operator.

It finds that there is a “pattern of harm and destruction” in JBIC-financed gas projects, and communities have conveyed to the bank that it is violating its own “Guidelines for Confirmation of Environmental and Social Considerations.”

According to Kete Fumo of the advocacy group Justiça Ambiental and Friends of Earth Mozambique, the project is indirectly contributing to the insurgency that has plagued the region for years.

“People in at least 17 districts are exposed to terrorist attacks. Some families in Palma district, for example, have been displaced but have not been offered any compensation yet. They had lots of extensive land, but not anymore; they have lost their only source of sustenance,” she said during a webinar to launch the report hosted by FOE Japan.

By 2018, when the census of affected communities in Palma was updated, some 616 families were identified, and another 1,847 families were found to be “economically affected” by the loss of their farmland handed over to the project, added Fumo.

“The environmental issues surrounding the project are already very visible, with accentuated erosion, increased weather events, and the fact that it is considered one of the six carbon bombs in the world, with Mozambique being one of the African countries most vulnerable to climate change,” she told IPS in an interview.

Failure to comply with compensation agreements entered between the affected and TotalEnergies posed a big problem for communities that, due to the lack of land for cultivation, now produce much less food than they did before the project arrived.

This has left them exposed to food insecurity, with fishing communities lacking access to fishing areas contributing to hunger in the villages.

“The insecurity scenario in Palma also makes accessibility to the district deficient, which makes the price of basic necessities more expensive in a community where families’ sources of income have been cut off by the project. People need to reinvent themselves to be able to support their families, but this is a scenario where not everyone has the capacity or conditions to do so,” the activist added.

She called for the abandonment of the project, saying that “not implementing the project and leaving people living in their homes with their livelihoods, culture, and traditions has been the call made by Justica Ambiental since the beginning of this process.”

“In the history of Mozambique and in our experience with mega projects, no resettlement has had positive results. The call continues to be that this project should not be implemented, since even before a drop of gas had been exploited, the impacts were already negatively affecting the communities,” Fumo appealed.

In one of the affected villages of Macala, 50 kilometres off the Indian Ocean coastline, residents claimed they had lost not less than 7,000 hectares of land alienated for LNG exploration and development, with no compensation so far.

One of the victims, Omar Amise, said, “We have received no compensation so far, and our lands have been destroyed by new infrastructure, including roads. Our children are starving because our lands have been taken by roads.”

According to the United Nations High Commission for Refugees (UNHCR), by January 2024, over 582,000 were still displaced in Cabo Delgado province, due to recurring attacks on civilians and governmental forces by “Non-State Armed Groups” since 2017. The numbers grew to over one million at the height of the conflict in 2021 and 2022, adds the UN agency.

From the end of December 2023, over 8,000 people have also been newly displaced as a result of attacks by insurgents in the province’s Macomia, Mecufi, Metuge, Mocímboa da Praia, Muidumbe, and Quissanga districts, adds the UNHCR.

An article published in September 2024 by the magazine Politico alleged that a Mozambican army unit operating near the Mozambique LNG project site carried out a series of atrocities, including rape, torture, and the murder or disappearance of at least 97 people.

It claimed that TotalEnergies was aware of the atrocities by the army in the wider area, while it paid a Joint Task Force made up of army soldiers, commandos, and paramilitary police for its LNG site protection.

Back to the FOE report, it claims that since 2016, JBIC has provided a staggering UD18.6 billion to fossil gas expansion—four times more than Japan’s contribution to the Green Climate Fund.

The bank is also blamed for supporting similar fossils energy projects amounting to USD18.5 billion in the Philippines, Indonesia, Bangladesh, Thailand, Australia, Vietnam, and the United States

Our enquiries on the claims made by FOE were answered by either the French Energy multinational or JBIC.

IPS UN Bureau Report