Ocean fire raises questions about U.S. support for Mexico’s oil and gas industry

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The US export credit agency Exim Bank has provided $ 16.14 billion in loans and guarantees to Pemex since 1998, with recent funds going to the site of the fire.

Campaigners called on the United States to reconsider its long-standing support for Mexico’s state-owned oil and gas company after a gas leak from one of its pipelines set the ocean on fire in the Gulf from Mexico.

Pemex made headlines earlier this month after the leak sparked a massive fire near one of its rigs, as the world watched in dismay.

For 76 years old, the company has received billions of dollars in support from the the United States Export Credit Agency, the Export-Import Bank (Exim), despite warnings about safety and environmental issues.

Since 1998, Exim has backed the fossil fuel company with $ 16.14 billion in loans and guarantees, according to Friends of the Earth analysis of the bank’s annual reports, seen by Climate Home News.

Most recently, in September 2020, Exim approved $ 450 million in business support.

The funding “would facilitate the purchase of US oil and gas equipment and services supplied to approximately 21 oil and gas field projects,” the Exim press release reads.

According to documents submitted by Pemex to Exim, one of the projects was Ku Maloob Zaap, the oil field located 90 km off Campeche in the Gulf of Mexico, which was the site of the gas fire.

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VSamplifiers call for an investigation into the environmental and climatic damage caused by the fire.

But with little confidence in the Mexican authorities, analysts told Climate Home they were looking to regional allies such as the United States to lobby for Pemex to be responsible.

After last week’s incident, activists are stepping up calls for Exim to end his support for Pemex.

“I don’t understand how they would be willing to lend money to Pemex. The hypocrisy of the American administrations, who make all these statements about the climate, and then allow this company to be its biggest borrower. It’s scandalous “, Véronique de Rugy, principal researcher at the Mercatus Center, told Climate Home News.

The company was Exim’s largest customer until at least 2017, when the bank stopped disclosing its major borrowers in its Annual Report.

Between 1998 and 2015, Pemex received Exim money every year, with loans and guarantees averaging $ 850 million annually, according to the analysis. In 2013, 2014 and 2015, the bank had more loans outstanding to Pemex than to any other customer, it shows.

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In September 2020, after Exim authorized the last loan to Pemex, Friends of the Earth wrote a letter to bank chairman Kimberly Reed, criticizing the decision.

The campaign group opposed the loan “due to hundreds of worker deaths at Pemex facilities due to accidents and Covid-19, harmful environmental impacts of Pemex projects, allegations of corruption against Pemex management and failure to provide an assessment significant environmental and social impacts of Pemex projects ”.

By that time, Pemex had recorded more Covid-19 deaths than any other company in the world, according to Bloomberg analysis.

More … than 190 workers and contractors died and more than 570 were injured in fires, explosions and collapses of offshore platforms at the Pemex sites between 2009 and 2016.

Last week’s gas fire was not an anomaly, Kate DeAngelis, director of international finance at Friends of the Earth, told Climate Home.

“Pemex has a long history of environmental destruction and poor safety performance, as evidenced by the hundreds of workers who have been killed as a result of explosions, fires and other accidents at the sites. of Pemex, ”she said.

Much of Pemex’s production consists of heavy sour crude oil, which is particularly polluting, according to DeAngelis. “Pemex does not intend to reduce its harmful environmental impacts, ”she added.

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A 2020 report from the Mercatus Center, a US-based think tank, describes significant environmental, security and corruption concerns about Pemex and questions Exim’s continued support for the heavily indebted fossil fuel company.

“Working with Pemex posed a reputational risk to Exim Bank for decades,” the report read. “Exim Bank’s willingness to continue lending to Pemex may be due to the fact that Pemex is too big to fail.”

At the end of 2020, Pemex declared that its financial debt stood at $ 113.2 billion, despite several injections of capital from the government. In April, the company said it expected maintain a debt of 105 billion dollars between 2021 and 2025.

Given its long-standing relationship with Pemex, “Exim could have used that leverage to demand strong environmental and worker protection measures, but it seems Exim never even attempted to do so, ”DeAngelis said.

Exim did not respond to Climate Home News’ request for comment.


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