KOGAS, Samsung Heavy hit for LNG project
An environmental group has condemned Korean companies and banks involved in an ongoing liquefied natural gas (LNG) extraction project in the waters off Mozambique, arguing that the project has forcibly displaced local residents and increased the amount of greenhouse gases released into the atmosphere, according to the Seoulbased organization, Monday.
Solutions for Our Climate (SFOC) said that the country’s major private construction companies, staterun gas field development firm and public banks are part of the controversial project now under observation by international environmental campaigners and demanded they pull out of their roles.
The project targets Rovuma Basin near Cabo Delgado Province in the northern part of the African country and runs six extraction areas above the natural reserve. SFOC said the reserve contains at least 150 trillion cubic feet of LNG — the largest volume discovered worldwide in recent years. Korean firms are involved in extraction areas 1 and 4.
SFOC said Korea Gas Corp. (KOGAS) owns 10 percent of Area 4’s operation share and has invested 1.2 trillion won ($900 million) in the project since 2008 until last August. The campaigners said KOGAS has also requested the Korea Development Institute for a feasibility study on another project in the area and, if the agency approves it, KOGAS will begin the new project this year extending its investment into the area to over 9.3 trillion won.
Samsung Heavy Industries and Hyundai Samho Heavy Industries, SFOC added, have signed letters of intent (LOI) to build eight and nine LNG tankers, respectively, for Area 1. Daewoo E&C has earned a project worth 500 billion won to build a plant at the Afungi LNG site in the same area.
The Export-Import Bank of Korea, the Korea Trade Insurance Corp. and Korea Development Bank are also backing the Korean firms, having funded them with over 3.6 trillion won altogether, according to SFOC.
Kim So-min, a campaigner from the group, said these banks didn’t properly evaluate the project’s potential risks in terms of human rights, environment and financial security before deciding to fund the companies.
Construction in Area 1 has been put on hold since 2021 when a local militant group opposing the project attacked the city of Palma near an LNG plant in the area. As a result, this led to TotalEnergies, a French multinational firm that owns the biggest operation share in the area, evacuating its employees.
Kim said TotalEnergies, borrowing the authority of local soldiers in 2016, displaced over 550 households near the plant site without offering enough restitution and fueled local dissatisfaction against the project. It led to the formation of Al-Shabaab, a local military group, which started attacking local residents a year later and has displaced over 1 million people as of November 2022.
“If the Korean banks and the companies continue to invest into this controversial project, they will never get away from being held responsible for the local conflicts in Mozambique which violate human rights,” Kim said. “Besides, the global movement of energy transition is increasingly reducing global demand for natural gas. It could potentially put the whole project on hold.”
SFOC cited Daniel Ribeiro, founder of the Mozambique regional office of global environmental group Friends of the Earth, saying that local residents who lost their livelihoods and lands due to the project have been mobilizing against the government.
“If investors are concerned about the well-being of Mozambique and its people then they should reconsider investing in the gas projects in the north of the country,” Ribeiro said in a press release distributed by SFOC. “Besides, economic studies have shown unfair benefit sharing, which will leave Mozambique with a number of heavy economic risks and little wealth.”
A Samsung Heavy Industries official said the company’s LNG tanker construction deal for the project hasn’t been finalized yet and has no particular comment at this point.