Home Business Ex-Im Bank faces setback in financing LNG terminal in Papua New Guinea

Ex-Im Bank faces setback in financing LNG terminal in Papua New Guinea

by SuperiorInvest

Even as the Biden administration, under pressure from environmentalists, pauses its approval of a major natural gas export terminal in the United States, it faces another big decision on overseas gas.

A $13 billion natural gas export project in Papua New Guinea led by TotalEnergies and Exxon Mobil is on a short list of projects to receive financing from the U.S. Export-Import Bank, or Ex-Im, which supports American companies around the world.

The Papua LNG gas project would join a portfolio of oil and gas projects the bank is financing, including an oil refinery in Indonesia and an oil tank project in the Bahamas. The bank is also considering financing an offshore gas pipeline and natural gas plants in Guyana.

Some climate activists see a major contradiction between the climate actions the government is taking in the United States and around the world.

“He’s done a lot at home,” said Kate DeAngelis, who works in international finance at Friends of the Earth, a network of environmental organizations that has asked the bank not to fund the project, referring to President Biden.

But he “cannot claim to be a climate advocate when the United States is propping up this fossil fuel infrastructure around the world,” he said.

Between 2017 and 2021, the Ex-Im Bank, whose board of directors is appointed by politicians, provided nearly $6 billion in financing for fossil fuel projects and $120 million for clean energy, according to a tally by the Perspectives Climate Group and the non-profit group Oxfam. .

A senior Ex-Im official told The Times that while the bank “seeks to align with the administration’s climate agenda,” it still needed to comply with legal requirements, including a “ban on discrimination based solely on industry, sector or business”. The bank’s fundamental mission, the official added, was “to support American jobs.”

The Papua gas project has been particularly controversial. Promises to bring wealth to one of the poorest nations in the world and has the strong support of the local government. Its operators seek to supply gas to Asian nations to move away from coal, the dirtiest fossil fuel and one of the main drivers of climate change.

The gas project “will contribute to the security of LNG supply, especially for customers in Asia, where LNG can replace coal for power generation and participate in a substantial reduction of CO2 emissions in the region,” it said. Julien Pouget, vice president of TotalEnergies. he said last year. LNG means liquefied natural gas.

Whether gas displaces coal, rather than simply adding new capacity or displacing renewable energy sources like wind and solar, varies widely by country. Environmental groups point to research that increasingly questions the climate benefits of switching to gas. And liquefying the gas to transport it in transoceanic tankers consumes a lot of energy.

For Papua New Guinea, a largely rural nation of about 10 million people, the increase in emissions would be enormous. The project itself, the country’s second liquefied natural gas project, will add more than 7 percent to its energy and industry emissions, according to an analysis by the Institute for Energy Economics and Financial Analysis, a think tank that has criticized the company. .

TotalEnergies said in a statement that it was “fully committed to reducing the project’s footprint to the strict minimum.” The project, for example, plans to power its natural gas processing with a gas and steam turbine, as well as solar energy, according to the company.

Local environmental groups have warned that the project, which will be built in a remote area of ​​the country with little previous mining or oil and gas development, will be detrimental to biodiversity.

A previous gas project, led by Exxon and supported by Ex-Im, was mired in accusations of environmental destruction and human rights violations.. Papua New Guinea is already one of the most vulnerable countries in the world to natural hazards, including coastal erosion, landslides, floods and droughts.

“We have very serious concerns about what this project will mean for local communities, the climate and nature,” said Peter Bosip, executive director of the Center for Environmental Law and Community Rights, an advocacy group based in the nation’s capital.

The project has struggled to find financial backers, after French and Australian banks walked away from the project. It has also not announced any long-term purchase and sale agreements, reflecting uncertainty over future gas demand.

An Ex-Im spokeswoman declined to give a timeline for a financial decision. Papua New Guinea’s Department of Petroleum and Energy and White House officials did not respond to a request for comment.

The Ex-Im financial decision is particularly important, said Kevin Morrison, an analyst at the Institute for Energy Economics and Financial Analysis.

“They are the ones who are really going to set the example,” he said.

Source Link

Related Posts