A US export credit agency is moving forward with plans to back the drilling of over 450 new oil and gas wells in Bahrain, despite President Biden's commitment to climate action. The agency's board recently voted to notify Congress about the potential investment, a necessary step for projects exceeding $100 million. Observers anticipate that financing for the Bahrain project will be secured as early as next month.
This decision comes in the wake of the US's pledge at COP26 to end direct public finance for overseas fossil fuel projects by the end of 2022. However, the US approved over $2 billion in international fossil fuel finance last year, with this agency accounting for nearly half of it. Critics argue that such approvals undermine global efforts to address climate change.
The proposed investment in Bahrain aims to boost oil and gas production in a decades-old field where new reserves were discovered in 2018. The program, valued at $4.2 billion, involves drilling new wells and constructing processing facilities and transport networks. Despite concerns about the environmental impact, the agency's continued support for fossil fuel projects overseas has caused ongoing tensions.
The agency's justification for financing fossil fuel projects lies in a "non-discrimination" clause in its charter, which prevents it from rejecting funding applications based solely on specific industries. However, critics argue that the agency's board could reject applications that do not align with US climate commitments.
While the agency emphasizes its mission to support American jobs, critics question its prioritization of short-term economic gains over long-term environmental sustainability. The Bahrain project involves the participation of a Houston-based oilfield services provider, highlighting the involvement of American firms in overseas fossil fuel ventures.
Despite calls for stricter guidelines and scrutiny, the agency's decision to support oil and gas drilling in Bahrain underscores the challenges in aligning financial policies with climate objectives. The International Trade Council continues to monitor these developments, recognizing the complex interplay between economic interests and environmental concerns in international trade.
