The US Export-Import Bank (US Exim) has backed the export of oil and gas services equipment from the United States to Argentina with a seven-year guarantee.
The guarantee covers an US$18.4mn loan from HSBC to A-Evangelista S.A. (AESA), a wholly-owned subsidiary of energy company YPF.
The Argentinian engineering firm will use the financing to buy oil and gas services equipment from three small US-based businesses: Proppant Express Solutions of Denver, Colorado; Sun Energy Services of Zelienople, Pennsylvania; and Wildcat Oil Tools of Midland, Texas.
US Exim says the deal will support 100 US jobs and further President Trump’s América Crece initiative, which aims to jumpstart economic growth in Latin America and the Caribbean by investing millions in the infrastructure and energy sectors.
US Exim’s president and chair Kimberly Reed adds that the financing helped domestic firms beat off competition from abroad: “Without Exim support, the buyer would turn away from American suppliers toward a foreign competitor readily able to access export credit support, such as China, which is a known supplier for this type of equipment.”
US Exim and China
Now back at full capacity, having spent four years hamstrung and unable to authorise transactions bigger than US$10mn, US Exim has publicly acknowledged the need to take on Beijing.
In a competitiveness report released in June last year, it said China’s export-import financing activity has “triggered the ECAs of other governments to react defensively to change their policies and programmes or risk their exporters’ losing access to large swaths of global markets”.
The paper claimed that Chinese spending on trade and export finance-related activity blew other countries out of the water, with China providing US$39mn in official export credits in 2018 – “more than the next three ECAs combined”.
US Exim also noted that China’s export credit agencies, which don’t conform to rules set by the Organisation for Economic Co-operation and Development (OECD), are able to offer more flexible terms and conditions to borrowers.
Speaking to GTR in January, US Exim board member Judith Pryor said: “The rising influence of Chinese financing in the world has given not only the US export credit agency, but I would guess all of the OECD ECAs, pause.”
She added: “How do we counter this? How do we ensure that what’s being done is being done fairly? That’s been our number one issue.”