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(Bloomberg) -- US Export-Import Bank leaders are moving forward with plans to underwrite the drilling of more than 400 oil and gas wells in Bahrain, even as President Joe Biden halts new liquefied natural gas export licenses over climate concerns.
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The bank’s board voted behind closed doors Thursday to notify Congress about the project — a required precursor to formal approval, which could happen as soon as next month. No transaction is final until it has board approval.
The potential loan of more than $100 million to expand production in the prolific Bahrain Field marks the credit agency’s latest move to support the kind of foreign fossil-fuel projects the Biden administration promised in 2021 to forgo.
“Ex-im is going rogue” and “continuing to undercut Biden’s ambitious climate agenda,” said Kate DeAngelis, international finance program manager for the environmental group Friends of the Earth. “Just as Biden is limiting US LNG exports, ex-im is propping up similar infrastructure in Bahrain.”
In the past year, the lender also has backed the expansion of an Indonesian oil refinery and helped boost purchases of US LNG for customers in Europe. Overall, the bank approved at least $910 million in international fossil-fuel finance in 2023, according to analysis by Oil Change International — all of it coming after the US signed a pledge with 33 other nations to halt direct support for international fossil-fuel projects.
The approvals have drawn outrage from environmental advocates, sparked frustration among some Biden administration officials and even prompted two members of the bank’s climate advisory council to step down in protest.
The Bahrain project targets new drilling in an oil field that started yielding crude nearly a century ago. The venture is primarily designed “to increase the production of oil and the availability of gas to meet the future energy demands of the Kingdom of Bahrain,” according to bank documentation. Potential beneficiaries include the oil services company SLB, as well as the field’s operator, National Oil and Gas Holding Company B.S.C. unit Tatweer Petroleum-Bahrain Field Development Company W.L.L.
Biden vowed to curb public funding of foreign fossil fuel projects in 2021 with an executive order issued during his first week in the White House. Yet, he’s had trouble forcing development banks and other US public finance institutions to go along. A spokesperson for the White House did not immediately respond to a request for comment.
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The ex-im bank is an independent agency intended to bolster US exports, thereby supporting American jobs. Its charter rules out denials of financing “based solely on the industry, sector or business.”
“Ex-im seeks to align with the administration’s climate agenda while still complying with Ex-im’s statutory requirements, including the charter prohibition against discrimination,” as well as “its mission to support US jobs,” the bank said in an emailed statement. “Any change to ex-im’s charter must be passed through congressional action.”
Bahrain is an ally of the US; the Middle East island nation hosts US naval forces, and the two countries signed a strategic security and economic agreement last year meant to strengthen collaboration and intelligence sharing.
Climate activists say the bank has enough discretion to rule out financing for fossil fuel projects, based on their environmental impacts. And, they say, Biden can intervene. The agency’s charter authorizes the president to direct the trade bank to deny applications when doing so would “clearly and importantly advance United States policy” in specified policy areas such as promoting “environmental protection.”
“Ex-im hasn’t yet found a fossil fuel project it will reject putting US taxpayer dollars behind,” said Jake Schmidt, senior strategic director of international climate at the Natural Resources Defense Council. At this rate, “it is possible at the end of the Biden administration they will have put more money behind fossil fuels than climate reductions.”
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