Related News

Tariff war set to shrink global trade, WTO warns

US tariff onslaught prompts “painful” supply chain rethink

JBIC approves loan for coal imports

Trump directs US Exim to return to coal financing

Banks to increase trade finance tech spending but geopolitical risks loom

The Export-Import Bank of the United States (US Exim) did not intentionally delay funding for a US$20bn Mozambique LNG project due to political bias against the fossil fuel sector, its inspector general has found.

US Exim is a key backer of French company TotalEnergies’ project in the Cabo Delgado region and provided US$4.7bn as part of a wider project finance agreement involving several other export finance institutions.

The agency paused disbursements in 2021 when Total declared force majeure on the project, after Islamist terrorists launched attacks near the site.

US Exim had previously resisted calls to re-approve funding despite pressure from Republican politicians. It only unfroze funds last month when a board temporarily installed by US President Donald Trump made necessary changes to the financing agreement, such as extending contractual dates.

In a report this week, US Exim’s Office of Inspector General (OIG) says an internal committee recommended re-approving the Mozambique financing in February 2024, however then-Exim chair and president Reta Jo Lewis never put the deal to the board for approval.

But the OIG said it “did not find evidence that delays were intentional” or proof of general “bias in Exim’s decision-making for oil and gas transactions”.

The OIG, which provides “independent and objective” reviews of US Exim’s operations, also concluded that the agency has not violated a provision in its charter which prevents discrimination based on “industry, sector, or business”.

However, the inspector general said a “lack of transparent information” and project tracking processes meant it was unable to “independently assess” the cause of delays related to the Mozambique project.

The OIG urged US Exim to be more transparent in its decision-making and criteria for green-lighting projects.

“Exim officials told OIG that some oil and gas transactions, including the Mozambique LNG project, experienced prolonged processing times. The absence of documentation explaining these perceived delays contributed to stakeholder concerns about fairness and consistency,” the report says.

In the report, it recommends US Exim create an electronic system to track pending transactions and document the rationale behind timeline changes and delays. “This process should include structured reporting mechanisms to provide non-sensitive, public-facing updates on major transactions.”

The audit follows claims from Republican politicians that US Exim’s delays may have been politically motivated, designed to stall a gas project that would undermine the climate agenda of former President Joe Biden.

“There must be enormous political pressure to ignore your charter by applying a green filter to transactions,” congressman Blaine Luetkemeyer said to US Exim’s then-chair, Reta Jo Lewis, last year.

US Exim’s inspector general launched its investigation after it “received concerns” regarding perceived intentional delays, notably for TotalEnergies’ Mozambique development.

The export credit agency authorised approximately US$8.4bn in financing last year, of which about 6% – or US$0.5bn – was tied to oil and gas.

Much to the chagrin of climate activist groups, US Exim has remained an active backer of fossil fuels despite the US pledging four years ago to end public finance for overseas fossil fuel projects, and as other export credit agencies have slashed their exposures.

Several countries, including the UK, Sweden and Denmark, have banned or heavily restricted export credit support for oil and gas.

US Exim declined to comment when contacted by GTR.

 

A lengthy delay

In another key recommendation, the OIG says the US Exim chair and board should establish criteria when selecting projects for board approval to avoid the perception of industry favouritism.

“One board member stated, there is no written policy or criteria for advancing transactions for board approval; it ultimately depends on the chair’s discretion,” the report found.

US Exim’s transaction review committee met several times to discuss the Mozambique project, reveals a letter sent to GTR following a freedom of information request.

The final review stage of the committee, known internally as TRC-3, held its most recent meeting on February 5, 2024, the response states.

“At that meeting nothing was identified that was viewed as a bar on continued processing of the proposed finance transaction amendments toward review and decision-making by the Exim board,” US Exim’s response states.

The TRC-3 evaluates a deal’s readiness for board consideration and is comprised of various senior personnel, including US Exim’s chief banking officer, general counsel, chief risk officer and senior vice-presidents.

The onus is then on US Exim’s chair to decide whether to list the transaction on the board’s agenda.

However, Lewis opted against doing so with the Mozambique LNG project, the OIG report says. “Security conditions in the Cabo Delgado region improved in 2023, leading the project sponsors to resume engagement with lenders,” it says.

“An additional amendment to adjust the project timeline was presented to Exim’s TRC on February 5, 2024, with staff recommending approval…. Despite the TRC’s recommendation, Ms Lewis did not schedule the amendment for a board vote over the next eleven months citing, in part, security concerns.”

Security risks remain high near the Mozambique LNG project, of which Total owns a 26.5% stake.

Following a disputed national election in October, there have been widespread protests across Mozambique and hundreds of people have been killed, NGOs say. Insurgent attacks have been reported in the Cabo Delgado region.

Last month, French prosecutors launched a judicial investigation into TotalEnergies over potential manslaughter and a failure to help people in danger during the jihadist attack, allegations the energy company has strongly denied.

As first reported by Politico last year, local security forces operating from the site have been accused of massacring at least 97 civilians in 2021. Mozambique’s attorney general opened a criminal investigation last month.