US approves $500m loan for Bahrain oil project

Reuters

The US export credit agency has approved a $500 million loan guarantee for Bahraini state-backed Bapco Energies.

The Export-Import Bank of the United States (Exim) board of directors greenlit the project after voting last month to notify Congress about potentially supporting the expansion of an oil and gas field in the Gulf nation.

JP Morgan has acted as the lead arranger for the loan.

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Oil and gas continue to play an essential part in Bahrain’s economy, although the kingdom is believed to have one of the most diverse economies in the GCC.

The hydrocarbons sector accounted for 17.7 percent of real GDP in 2022 and 68 percent of total government revenue in 2021.

The island nation has been looking for international financing for a $4.2 billion field oil and gas expansion programme.

This involves upgrades to existing field infrastructure, the drilling and completion of at least 430 new oil wells and up to 34 new gas wells in one of the oldest extraction fields across the Middle East.

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All production associated with the Exim-backed project is expected to be consumed domestically in Bahrain, leading to no net increase in export energy supplies.

Bapco has committed to sustainability by signing the Cop28 oil and gas decarbonisation charter, aiming to achieve net-zero operations by 2050 and end routine flaring by 2030.

“This transaction will support thousands of US jobs and play a crucial role in ensuring Bapco Energies is able to achieve its climate goals of enhanced grid interconnectivity, more efficiency, decarbonisation, and investments in large-scale solar projects,” Exim president and chair Reta Jo Lewis said.

The project will prioritise emissions reduction, including implementing leak detection systems, on-site solar energy production, and the elimination of higher-emitting process equipment and non-emergency flaring.

The US is among the more than 30 countries that joined a pledge to end public financing of fossil fuel projects overseas at the Cop26 climate conference in Glasgow in 2021.

Reuters, however, reported that the US export agencies have approved eight fossil fuel projects valued at more than $2 billion since making the pledge.