In what could be a hopeful sign for Guyana’s ambitious gas to energy project, the U.S. export credit agency on Thursday voted to approve a US$500 million loan guarantee for an oil and gas drilling project in Bahrain, testing a U.S. climate pledge to stop backing projects that expand the use of fossil fuels.
Reuters reported that the board of directors at the Export-Import Bank of the United States (EXIM) approved the project after voting last month to notify Congress about potentially supporting the expansion of an oil and gas field in the Middle Eastern country with over 400 new oil wells and 30 gas wells.
While EXIM’s loan to Bapco Energies would be out of step with the Biden administration’s pledge to stop public financing of fossil fuel projects overseas, according to Democratic lawmakers opposed to the loan, as well as environmental activists, the agency said the project includes measures intended to reduce greenhouse gas emissions, Reuters reported.
Bapco had signed on to the COP28 Oil and Gas Decarbonization Charter, which commits it to achieve net-zero operations by 2050 and end routine flaring by 2030, the report added.
“This transaction will support thousands of U.S. jobs and play a crucial role in ensuring Bapco Energies is able to achieve its climate goals of enhanced grid interconnectivity, more efficiency, decarbonization, and investments in large-scale solar projects,” EXIM President and Chair Reta Jo Lewis said in a statement.
In a letter to EXIM’s board members on Tuesday, Democratic lawmakers had lobbied for a rejection of the loan guarantee.
“We urge you to take EXIM’s mandate to consider the environmental impacts of projects seriously, and to start by disapproving new funding for oil and gas drilling in Bahrain,” the lawmakers, led by U.S. Senator Jeff Merkley, said in the letter.
Reuters pointed out that the U.S. was one of more than 30 countries that joined a pledge to end public financing of fossil fuel projects overseas at the COP26 climate conference in Glasgow in 2021.
But the U.S., through its export agencies, has approved eight fossil fuel projects totaling more than US$2 billion since it made that pledge.
An environmental group filed a complaint in December with the Organisation for Economic Co-operation and Development over EXIM’s oil and gas financing deals.
Reuters said that EXIM is also weighing support of fossil fuel projects in Papua New Guinea and Guyana, with votes due later this year. It noted that U.S. oil giant Exxon is developing one of the world’s biggest oil discoveries in Guyana.
Anxieties
The delay in the US EXIM’s approval of Guyana’s project has caused anxieties in the government here and business community particularly in the wake of aggressive campaigning by climate activists.
Last month, the Georgetown Chamber of Commerce and Industry (GCCI) wrote to the US EXIM Bank expressing support for the bank’s financing of the huge gas-to-shore project.
In so doing GCCI dismissed concerns raised by civil society members here that the bank should not fund the project.
“Consequently, the GCCI wishes to express our deep concern and strong condemnation of certain attempts by a small minority of individuals to discredit the project and discourage the EXIM Bank from providing financial support for this landmark project,” a letter from the GCCI to President of the US EXIM Bank Lewis, stated.
The letter was copied to Speaker of the United States House of Representatives, Mike Johnson; Assistant Secretary of State for Western Hemisphere Affairs, Brian Nichols; President Irfaan Ali; Vice President Bharrat Jagdeo; Leader of the Opposition, Aubrey C. Norton; and Minister of Foreign Affairs and International Cooperation, Hugh Todd.
“The GCCI is especially disheartened to see the vilification of a project that holds significant potential benefits for our nation and its citizens, we are appalled at missives penned requesting that the loan to fund the initiative be blocked. Though the GCCI respects the importance of public discourse and right to differing opinions, it is essential to acknowledge that the comments and actions by these dissenting voices do not reflect the interests of the business community in Guyana which has stated in multiple public forums that we will support any project that helps to lower the cost of electricity,” the letter added.
Making a case for the GTE (Gas-to-Energy) project, the GCCI said that the project will “contribute significantly to Guyana’s energy transition, reduce reliance on fossil fuels, and promote sustainable practices.”
“This project is anticipated to reduce electricity costs by approximately 50 per cent – a material change in the cost of electricity for Guyanese citizens and enterprises alike. The GCCI sees this project as having immense potential to drive economic growth, enhance energy security, and promote sustainable development in the Western Hemisphere,” the GCCI noted.
As the US EXIM Bank considers a US$660 million loan for the GTE project, public-interest litigants, Elizabeth Deane-Hughes and Vanda Radzik have instructed their attorney-at-law Melinda Janki, to write to the institution pointing out that the bank should not provide funding for any project which is based on a decision (the grant of a permit) that is “contrary to law.”
The letter which was sent to a number of EXIM Bank staff on Friday, January 12, and to the President of EXIM bank, Lewis, states in part, “Eximbank should not provide funding for any project which is based on a decision (the grant of a permit) that is ‘contrary to law’. Eximbank should respect the rule of law in Guyana.”
The letter referenced the case of Radzik and Deane-Hughes v Environmental Protection Agency (EPA) and Esso Exploration and Production Guyana Ltd. (Esso) which challenged the EPA’s grant of an environmental permit to Esso for the gas-to-shore project. “We argued that Esso had not submitted the information, required under the regulations, to show that Esso had legal right or authority to do the project without the consent of the landowner or occupier.”
The letter further pointed out, “After examining the evidence put forward by Esso, the court stated that, “It therefore cannot be said, that at the time of grant of the permit on 25th November 2022, that Esso Guyana had submitted all the relevant documents which could potentially evince a legal right or ability to conduct the proposed project without the consent of the landowner or occupier.”
As such, Deane-Hughes observed that “The rule of law ought to take priority over government plans for this gas project and EXIM Bank ought not to support anything that is contrary to law. All companies & partnerships operating in Guyana, including Stabroek Block Partners, need to adhere to & follow the laws of our country. Moreso, in debut unprecedented transformational & transformative projects.”
