Democrats Warn US Trade Bank on Backing Bahrain Oil Drilling

(Bloomberg) -- Congressional Democrats are making a last-ditch appeal to leaders of the US Export-Import Bank before a critical vote Thursday, warning the agency its plan to underwrite oil drilling in Bahrain would undercut global efforts to fight climate change.

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“The world is in the midst of a climate crisis that is already having devastating impacts,” the lawmakers, led by Senator Jeff Merkley of Oregon, said in a letter to bank board members and Biden administration officials. “We cannot afford to have ex-im undermine domestic and international climate progress by financing projects that worsen this crisis.”

The missive comes amid intensifying scrutiny of how independent US agencies are addressing climate change — following a spate of decisions running counter to President Joe Biden’s environmental agenda. The export-import bank has drawn particular ire for providing some $901 million in finance for fossil fuel projects last year, including a refinery in Indonesia, an oil venture in the Bahamas and gas turbines in Iraq.

The bank’s board is set to vote on a potential loan of more than $100 million to expand oil and gas production in the prolific Bahrain Field on Thursday. 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.

The ex-im bank is an independent agency intended to bolster US exports, thereby supporting American jobs. Its charter bars denying financing “based solely on the industry, sector or business” — a prohibition congressional Republicans have admonished the bank to heed.

Yet the bank’s charter also empowers it to deny financing for projects based on environmental concerns, said Merkley and the other lawmakers, including Senator Bernie Sanders, an independent from Vermont, and Representative Ro Khanna, a California Democrat. The “non-discrimination provisions do not supersede the charter’s environmental policies and procedures,” they said.

Agency staff review transactions according to its statutory and policy requirements — including to ensure alignment with the bank’s environmental and social due diligence procedures and guidelines, a senior ex-im bank official said. If a transaction satisfies all of the bank’s eligibility criteria, the agency is prevented from discriminating against deals solely on the basis of industry, sector or business, the official said.

In 2021, the International Energy Agency said the world must halt investment in new oil and gas projects to reach net zero emissions by mid-century. Biden vowed to curb public funding of foreign fossil fuel projects in an executive order three years ago, and the US later signed a pledge with 33 other nations to halt that support. Biden in January halted new licenses to export liquefied natural gas, allowing for fresh analysis of the climate impact.

(Updates with comments from senior bank official in seventh paragraph.)

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