The British government has announced that it will no longer provide a loan to TotalEnergies for a gas project in Mozambique, which was halted due to a jihadist attack. The decision to withhold up to $1.15 billion in funding for the liquified natural gas (LNG) project comes after the consortium led by TotalEnergies lifted its suspension on the work in October.

The project, valued at $20 billion, was initially paused in 2021 following a deadly attack that killed an estimated 800 people in the northeastern Cabo Delgado province. TotalEnergies, which owns 26.5 percent of the project, had declared force majeure and sought $4.5 billion in cost overruns linked to the delay to be covered by the Mozambique government. The company aims to resume production at the gas site in 2029, subject to the African country’s approval of its new budget plan.

The UK government’s decision to halt financing for the project was made by UK Export Finance (UKEF), a government agency. Business Secretary Peter Kyle stated that the decision was made as the government believes that UK financing of the project will not advance the country’s interests. However, the UK remains committed to backing British exporters and supporting its national partnership with Mozambique to boost sustainable growth and address insecurity.

The Mozambican and international NGOs have criticized TotalEnergies for holding the country “hostage” over its demands for favorable conditions to restart the project. Environmental groups have also expressed concerns that the gas projects in the area could have devastating environmental impacts and bring little benefit to the local population, with over 80 percent of Mozambicans living below the poverty line.

The project is part of a larger effort to develop Mozambique’s natural gas reserves, which could make the country one of the world’s top ten natural gas producers by 2040. However, the development of these projects has been marred by controversy and concerns over the environmental and social impacts. The UK government’s decision to withdraw funding for the project highlights the complexities and challenges involved in developing large-scale energy projects in regions affected by conflict and poverty.