Securing financing for oil projects might prove to be relatively hard because a number of financiers have been cutting back on funding fossil energy production due to climate concerns. Photo | File The extraction of oil has come at a tough time. The world is making a radical shift from fossil fuel as an energy resource to climate-smart energy.
This shift is already causing some discomforts to countries with greenfield oil and gas projects because global financing institutions are cutting back on funding oil projects.
On Wednesday, Standard Group, one of Africa’s biggest funders of oil projects, said it will reduce financing oil projects by 5 percent by 2030.
Standard Group, which has affiliates across Africa, including Stanbic Bank in Uganda, also said it will stop providing financial products and services for extraction, exploration and production of tight oil and pipelines.
It also intends to stop financing new oil-fired power plant construction or expansion, except where plants provide support services as part of an integrated renewable energy power plant.
The reductions will also extend to power sector clients generating energy from oil with funding cut from 0.05 percent of total group loan advances in 2021 to 0.03 percent in 2026 and to zero by 2030.
Sim Tshabala, the Standard Bank chief executive office, said in a statement: “In certain tightly defined circumstances,” the Group will remain open to supporting ‘brown’ energy and mining projects in Africa.
It is not clear if this decision will affect Uganda’s oil projects in a substantial way.
However, Stanbic Bank officials in Kampala, who asked to remain anonymous, did not indicate their position, telling Daily Monitor that: “We have been active participants in oil and gas financing.”
Stanbic is currently undertaking support in business training for small and medium enterprises across 10 districts along the East African Crude Oil Pipeline.
Standard Chartered Bank’s official position on oil financing shows the bank will no longer finance new projects in exploration and production in the Arctic and Amazon Basin regions.The bank’s statement, however, is silent on oil financing in Africa.Uganda’s biggest lender, the World Bank, resolved in 2017 “it would no longer finance upstream oil and gas operations starting 2019 over climatic concerns.”However, the bank said: “The financing could only be made in exceptional circumstances, with consideration given to financing upstream gas in the poorest countries where there is a clear benefit in terms of energy access.” It’s not clear if Uganda will benefit from this […]
