Index for June 2017

Volume 16, Issue 6

  • (Both ENDS, Amsterdam, 14 June 2017) Export Credit Agencies (ECAs) are key institutions governments employ to support private companies doing business overseas. ECAs offer a wide range of guarantees and insurances to private companies. This makes it easier for these companies to gain access to finance, mostly from banks. Based on publicly available data, this report concludes that the Dutch Export credit agency Atradius DSB, which provides export insurances on behalf of the Dutch state, insured fossil fuel-related projects with a total value of € 7.3 billion in the period 2012-2015. This is two-thirds of its total insured value for that same period.

  • EDC’s response to alleged abuse in Colombian oilfields highlights deficits in due diligence

    (Above Ground, Ottawa, 14 June 2017) Our latest correspondence with Export Development Canada (EDC) about the impacts in Colombia of two oil companies it financed highlights our longstanding concerns about the adequacy and transparency of the agency’s human rights due diligence practices. Last fall, following the release of a report documenting serious human rights abuses associated with the operations of EDC clients Pacific Exploration & Production and Ecopetrol in Colombia’s Rubiales and Quifa oilfields, we joined the report authors[1] in writing to EDC to express our concern. We asked the agency whether it was aware of the substantial risks associated with oil development in the region when it decided to finance the two companies, and how it would respond to the reported violations of indigenous, labour and environmental rights connected to its clients’ activities.[2] Export Development Canada’s letter of reply neglected to provide any substantive answer to these questions. As we note in our response to EDC, it remains unclear how the agency will address reported abuses associated with its clients’ activities — including the violation by Pacific E&P of Colombian law governing consultation with indigenous peoples, as determined by a 2015 court ruling. It also remains unclear how EDC will ensure that its clients remediate the harms caused, provide redress, and prevent their operations from heightening the serious risks to local community leaders who’ve spoken out critically about the companies’ activities and now face death threats.

  • (Banktrack, Berlin 29 June 2017) The environmental NGO urgewald and its partners have revealed which companies are at the forefront of plans to expand the world’s coal-fired power capacity by a staggering 42.8%. urgewald’s previous in-depth research played a key role in initiating the coal divestment actions of the Norwegian Government Pension Fund and the insurance company Allianz.

  • (Bonds & Loans, London, 13 June 2017) Kuwait National Petroleum Company’s (KNPC) US$6.245bn ECA-backed loan includes plans to modernise the Mina Al Ahmadi oil refinery located in Al Ahmadi Governorate, south of the country, to make it meet stringent environmental requirements.

  • (Your Oil & Gas News, Edinburgh, 1 June 2017) Yamal LNG announced the signing of agreements with several European banks, inter alia Raiffeisen Bank International AG and Intesa Sanpaolo for up to 425 million with insurance coverage provided by the Swedish export credit agency EKN and the German export credit agency Euler Hermes. Yamal LNG has previously received financing from the National Welfare Fund of Russia, signed agreements on credit lines with Sberbank and Gazprombank, as well as with the China Development Bank and the Export-Import Bank of China, the Japan Bank for International Cooperation (JBIC) and the bank Intesa Sanpaolo with insurance coverage by the Italian export credit agency SACE and the French export credit agency COFACE. In June 2015 WWF Russia noted that the Environmental and Social Impact Assessment of the project, while complying with the best Russian practices were not complete regarding a number of issues and that certain ESIA strategic conclusions required additional discussions and consultations.

  • (Reuters, Maputo, 1 June 2017) Italian energy company Eni signed an $8 billion deal on Thursday to develop a gas field off the coast of Mozambique, the first of a series of projects that could transform the poor African nation into a major energy supplier to Asia. Developing the Coral South field requires building six subsea wells connected to a floating facility capable of producing about 3.4 million tonnes of liquefied natural gas (LNG) per year. Eni said project finance would fund 60 percent of the cost of building the floating LNG facility, while the financing agreement has been subscribed by 15 major international banks and guaranteed by five export credit agencies [Export-Import Bank of China, Coface of France, Export-Import Bank of Korea (Kexim), Korea Trade Insurance Corporation, and SACE of Italy] The floating LNG platform will be built in South Korea by a consortium led by Samsung Heavy and including France’s Technip and Japan’s JGC.

  • (OpenGovAsia, Singapore, 16 June 2017) The Export-Import Bank of India (EXIM Bank) and the Export-Import Bank of Korea (KEXIM) have signed a Memorandum of Agreement (MoU) for export credit of USD 9 billion to support infrastructural development in India and for the supply of goods and services as part of projects in third countries.

  • (Seeking Alpha, Ra'Anana Settlement Israel, 31 May 2017) Boeing has sealed a deal for Italy's export credit agency to provide an initial $1.25B/year in guarantees for jetliner sales, partly to fill the void left by the U.S. Export-Import Bank, which has been restricted since July 2015 when some lawmakers blocked the appointment of a new board. Dow Jones reports that the new agreement with Italy's Sace is the first between Boeing and an overseas export credit agency and provides a template for the company to secure similar deals with other countries that supply large parts of its jetliners.

  • (Defense News, Washington, 20 June 2017) U.S. President Donald Trump has formally nominated former members of Congress, Scott Garrett and Spencer Bachus, to two vacant positions on the U.S. Export-Import bank as expected, a win for the defense and aerospace sector.  Trump announced the move in April — a reversal after calling the federal government’s export credit agency “excess baggage” in 2015. Though the Heritage Foundation and some free-market conservatives have criticized the Ex-Im Bank as subsidizing foreign competitors of U.S. firms, the Aerospace Industries Association, touted it as vital to small- and medium-size companies. Among the largest export beneficiaries of the bank’s financial assistance have been Boeing and General Electric, which have overseas customers that use the agencies' government-backed loans to buy their products.

  • (Financial Tribune, Tehran, 19 June 2017) Iran has held negotiations with Italy’s Medibank and SACE export guarantee for €2 billion ($2.24 billion), Exim Bank of China for $30 billion, China Development Bank for $15 billion, Korea Export–Import Bank for $8 billion and Korea Trade Insurance Corporation for $5 billion to receive foreign financing. Other parties involved in finance negotiations with Iran include Japanese Nippon Export and Investment Insurance and the Japanese Ministry of Finance for $10 billion, the Japan International Cooperation Agency for €1.2 billion ($1.34 billion), Russian Ministry of Economic Development for €5 billion ($5.6 billion) and the Norwegian Guarantee Institute for Export Credits for €1 billion ($1.1 billion). Euler Hermes of Germany is also interested in covering investments in Iran. However, a lack of full-fledged banking ties between Iran and Europe is preventing the complete benefits of the German sovereign guarantee to be felt by Iran.

  • (Afreximbank Cairo, 26 June 2017) Madagascar has become the latest country to join the African Export-Import Bank (Afreximbank) as a participating state. Membership of the Bank gives Madagascar automatic access to the full range of products and facilities offered by Afreximbank, including trade finance facilities, project finance services, trade information and advisory services, support in the development of a local content policy and assistance in developing and implementing industrial parks and special economic zones.