French lender Credit Agricole has declared it will no longer finance the Rovuma LNG project in Mozambique and the Papua LNG project in Papua New Guinea.
The bank cited its commitments to reduce exposure to the oil and gas industry as the basis for its decision, according to a Reuters report on the news.
Rovuma LNG and Papua LNG are two of the largest liquefied natural gas projects in progress, with the companies involved including Exxon, TotalEnergies, Eni, and Australia's Santos.
Environmentalists welcomed the decision, commenting that it would be challenging for the energy companies to find an alternative bank to step in.
Exxon, the leader on the Rovuma project was expected to make the final investment decision on the project next year but this could change now. TotalEnergies, which leads the Papua LNG project had also planned on making the FID on the venture next year.
Credit Agricole is moving away from LNG just as demand forecasts for the superchilled fuel brighten, with Shell recently forecasting demand will surge by 50% in the next 16 years. Africa has abundant but underdeveloped gas resources that projects such as Rovuma and Papua were going to tap, helping the economies of Mozambique and Papua with a new and potentially huge revenue stream.
Credit Agricole, however, announced last December it was going to stop funding new oil and gas ventures in line with its net-zero commitments. The bank also said it would triple the amount of money it invests in transition-related technologies. Plans are to boost its exposure to alternative sources of energy by 80% over this year and next, expanding it to $13.3 billion euro.
"We need to massively invest in renewable energy and the energy sobriety in order to decarbonize the economy," the bank's chief executive Phillippe Brassac said at the time.
By Irina Slav For Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More