(Yahoo Finance, New York, 1 March 2024) Gunvor Group Ltd., one of the world’s top oil traders, will pay more than $660 million to resolve US and Swiss charges that the company paid bribes to Ecuadorian government officials for contracts. The information released by the US is a reminder of the seedy deals made in the not-too-distant-past by some of the biggest firms in commodity trading, which have made billions of dollars in profits on energy market volatility stemming from the Covid-19 pandemic and then the invasion of Ukraine. A shortage of key resources has also seen these companies strengthen ties with governments around the world — just a few months ago, Italy’s export credit agency guaranteed a €400 million ($433 million) loan to Gunvor in return for supplying gas to the country.
Oil & Gas
Total ECA Funders Weigh Mozambique Restart After 3 Year Halt
(Bloomberg, 1 March 2024) Lenders to TotalEnergies SE’s Mozambique liquefied natural gas project are weighing the release of billions of dollars in funding as the company plans to resume construction three years after development was halted by Islamist insurgent attacks. The planned onshore facility designed to export the southern African nation’s major gas discoveries attracted the biggest project financing yet seen in Africa. That was before Islamic State-linked militant attacks near the site in 2021 prompted Total to evacuate its personnel and declare force majeure. The US Export-Import Bank, which committed the biggest share of $4.7 billion in financing — and other lenders that comprise a total of about $15 billion in debt — are conducting assessments on reactivating the funding. The assessment of whether to resume financing coincides with a decision by the Biden administration in January to pause approval of new liquefied natural gas export licenses, in recognition that the climate impact from the fossil fuel needs to be reassessed. The US Eximbank’s loan to the Mozambique project was initially provided in 2020, during the administration of former President Donald Trump. While Russia’s invasion of Ukraine sent Europe on a scramble for alternative energy supplies that boosted interest in upcoming LNG production, projects in nations across Africa are still susceptible to a range of issues including political instability and construction delays. Mozambique has the added obstacle of an insurgency that’s become subdued by armed forces, though the Islamist fighters still carry out sporadic deadly raids. Atradius Dutch State Business, the Amsterdam-based Dutch export-credit agency that’s committed $1 billion to Mozambique LNG, said it’s also assessing the situation. “Due diligence is currently ongoing to assess whether we can allow drawdowns under the loan,” it said.
US & EU differ over the future of fossil fuel subsidies in OECD talks
(Financial Times, London, 26 March 2024) Second round of discussions ends without significant progress on export credit policies. The world’s richest countries are at odds over ending subsidies for oil and gas development as the US and EU differed over the extent of a ban, according to people familiar with the talks. OECD countries have held a second round of closed-door talks in Paris to debate proposals by the EU and UK to cut off most export credit agency loans and guarantees for oil, gas and coal mining projects, which are the biggest source of international public finance for the sector. This would follow an agreement in 2021 to stop providing such support for coal-fired power. A person familiar with the talks said the US was still assessing the EU’s proposals, with discussions scheduled to continue in June and November. The US Treasury declined to comment. The US, Canada, France, Germany and the UK were among countries that agreed around the UN COP26 climate summit in Glasgow in 2021 to align their public finance institutions with a Paris agreement goal to limit global warming to ideally 1.5C above pre-industrial levels. But this could affect the role of Exim, the US’s credit export agency, which will need to secure fresh funding from the US Congress in 2026, opening it to political scrutiny from Republican lawmakers who are resistant to cutting off finance for oil and gas, and progressive lawmakers critical of the bank’s climate record.
Fury Over $500 Million US Export-Import Bank Loan to Bahrain ‘Climate Bomb’
(Common Dreams, Portland, 15 March 2024) Despite a Biden administration pledge to stop backing international fossil fuel projects by 2022, the U.S. Export-Import Bank announced Thursday that it would provide a $500 million loan for oil and gas expansion in Bahrain. The funding marks the fifth time that EXIM has chosen to back a fossil fuel project abroad since President Joe Biden joined the Clean Energy Transition Partnership (CETP) at the United Nations COP26 climate conference in Glasgow in 2021. “EXIM’s decision to approve the Bahrain oil and gas project is another alarming step in the wrong direction for climate action, as the bank goes rogue and continues to defy President Biden’s promises,” Nina Pušic, an export finance climate strategist at Oil Change International, said in a statement, adding that the project was a “huge climate bomb paid for by the American taxpayer.”
Exim Approves $500 Million for Bahrain Oil Project Despite Biden’s Climate Commitments.
(New York times, New York, 14 March 2024) A federal bank that finances projects overseas voted Thursday to put $500 million toward an oil and gas project in Bahrain, a transaction that critics said was out of step with President Biden’s climate commitments. Just days before the vote, six lawmakers had urged the bank, the Export-Import Bank of the United States or ExIm, not to move ahead with the financing, given the project’s negative effects on the climate. “We cannot afford to have ExIm undermine domestic and international climate progress,” lawmakers led by Senator Jeff Merkley, Democrat of Oregon, said in a letter to the bank’s board of directors last week. Similar articles appeared in Bloomberg, Reuters, the Huffington Post, Politico and E&ENews. Pope Francis has described delaying action on fossil fuels as “suicidal”, pointing to oil and gas companies continuing to carry out new projects – despite the International Energy Agency recently reaffirming that no new oil, gas, or coal fields are compatible with limiting global temperature rise to 1.5ºC – as humanity faces the increasingly severe consequences of the climate crisis.
SACE plans to back $1.6 billion in debt to Saudi Arabia
(Reuters, Dubai, 12 February 2024) Italy’s export credit agency SACE plans to back $1.6 billion in loans to Saudi Arabia over the next 12 to 18 months, the agency’s chief told Reuters, potentially boosting the country’s search for outside investment at a time of weak oil prices. Saudi Arabia last month sent requests for proposals to banks for the refinancing of a $10 billion syndicated loan, new bond issuance, and for ECA-backed funding. Saudi Arabia’s national oil giant, Aramco, has also been tapping this form of financing. The company is looking to raise billions of dollars in ECA-backed loans involving agencies across the globe ahead of its planned stock market listing, sources told Reuters last month. SACE, which is meeting prospective clients in the United Arab Emirates and Saudi Arabia this week, is evaluating projects in the Middle East and North Africa worth about $15 billion, $5 billion of which in the United Arab Emirates.
EXIM Climate Advisors Quit Over Fossil Fuel Plans
(New York Times, New York, 5 February 2024) A federal bank that finances projects overseas is set to vote on Thursday on whether to use taxpayer dollars to help drill oil and gas wells in Bahrain, a contentious decision that prompted two of the bank’s climate advisers to resign, according to people with knowledge of their decisions. The two advisers, who sit on an 18-person board that President Biden created to help the bank take climate change into account when making investments, resigned last week after a meeting about the Bahrain project, according to five current and former bank officials. They described mounting frustration among climate advisory board members, who say they are being kept in the dark about upcoming fossil fuel loans and blocked from making recommendations about whether to approve or even modify a particular project. Climatewire also notes that Biden embedded climate advisers into America’s export credit agency to increase scrutiny over its investments, but their work has mostly been stymied by the agency’s continued pursuit of fossil fuel projects. Five people with firsthand knowledge of the climate council’s work at EXIM described a sense of frustration over investments into projects such as oil and gas development in Bahrain and an Indonesian oil refinery that received a $100 million loan.
Joe Biden should end EXIM support for overseas oil and gas projects
(Guardian, London, 14 February 2024) Oil Change International and Friends of the Earth US say the US president must follow his move to restrain fossil fuel expansion at home with similar measures to curb it around the world. We back Bill McKibben’s call for more of the sort of leadership recently shown by President Joe Biden in pausing new liquified natural gas export terminals. Biden has another opportunity to curb the fossil fuel industry’s relentless expansionist agenda and affirm his climate credentials in this election year at an upcoming meeting of the Organisation for Economic Co-operation and Development (OECD). At Cop26, the UN climate conference in Glasgow in 2021, 34 governments, including the US, pledged to end international public finance for fossil fuels by the end of 2022. Despite this, in the last year alone, the US has provided more than $2.2bn to oil and gas projects around the world via its export credit agency, the US Export-Import Bank, and its development finance institution.
Petroperú Desperate for Cash Loses $500M SACE Loan Guarantee
(Amazon Watch, Oakland, 25 January 2024) In 2023, the Peruvian state-owned oil company, Petroperú, faced one of its worst financial crises, due to its accumulation of up to $6.5 billion in debt for its Talara Refinery Project, which will likely serve as a major driver of oil exploration and exploitation in Indigenous territories of the Amazon and in ancestral fishing grounds in the north Peruvian coast. Due to successful community opposition against oil activities, Petroperú was unable to secure a $500 million loan guarantee in 2023 from Italy’s export credit agency (SACE) partly due to intense scrutiny from Indigenous nations and strong backlash against Petroperú in Italy. The world’s largest fossil fuel financiers, Citigroup and JPMorgan Chase, are considering supporting the company again by arranging or underwriting Petroperú’s $1 billion bond issuance. This is despite ongoing demands by a united front of multiple Indigenous nations of the Peruvian Amazon for international financiers to halt new financing for Petroperú.
JBIC financing for two gas power projects in Mexico would violate the G7 agreement
(JACSES, Tokyo, 30 January 2024) The Japan Center for a Sustainable Environment and Society notes that two gas-fired combined cycle power projects in Mexico are now under consideration for financing by the Japan Bank for International Cooperation (JBIC). One is in San Luis Potosi and the other one in Salamanca. When Japanese NGOs asked the consistency of these two projects with the agreement reached at G7 Elmau Summit to end new public financing for fossil fuel energy, JBIC did not provide specific rationale on its judgment that the policy of the Mexican government is consistent with the 1.5 degree target. If JBIC provides support, it is highly likely that it constitutes a violation of the G7 agreement, thus JBIC should stop consideration for financing. JBIC placed these two projects on its list of projects under consideration for financing on November 2, 2023.
