WASHINGTON — The U.S. Export-Import Bank (EXIM) has greenlit a $500 million loan guarantee for an oil and gas drilling venture in Bahrain, prompting scrutiny over America’s climate commitments amidst fossil fuel financing.
The decision comes as the Export-Import Bank of the United States (EXIM) board approved the financing for Bapco Energies’ project, despite recent calls to halt public funding for projects expanding fossil fuel usage. The venture aims to establish over 400 new oil wells and 30 gas wells in Bahrain’s oil and gas sector.
While some critics argue the move contradicts the Biden administration’s climate agenda, EXIM highlights the project’s inclusion of measures to mitigate greenhouse gas emissions. Bapco Energies has endorsed the COP28 Oil and Gas Decarbonization Charter, pledging to achieve net-zero operations by 2050 and cease routine flaring by 2030.
According to EXIM President Reta Jo Lewis, the initiative is anticipated to bolster American employment and contribute to Bapco Energies’ climate objectives, including enhanced grid connectivity, efficiency, decarbonization efforts, and investments in large-scale solar projects.
However, Democratic lawmakers, led by Senator Jeff Merkley, have urged EXIM to reconsider its decision, emphasizing the importance of environmental considerations in project financing.
The U.S. previously committed to ending public financing of overseas fossil fuel projects at the COP26 climate conference in Glasgow. Despite this pledge, EXIM has approved over $2 billion in fossil fuel projects since then, sparking controversy and attracting criticism from environmental groups.
EXIM is currently evaluating similar projects in Papua New Guinea and Guyana, with decisions expected later this year. Notably, U.S. oil giant Exxon is spearheading one of the world’s largest oil discoveries in Guyana, adding complexity to the debate over fossil fuel financing.