Page 5 - LatAmOil Week 05 2021

LatAmOil COMMENTARY LatAmOil

For its part, BNP said it had already decided in repeatedly opposed oil and gas projects.
December of last year to stop financing deals
that involved Ecuador’s exports of Amazon oil. Limited options
The banks took this step after being named The banks listed in the report have indicated that
in a report published by two environmental they share these concerns.
organisations, Amazon Watch and Stand.earth, UBS, for example, recently stressed that it
as some of the biggest sources of financing for had “declined transactions where the origin
Ecuadorean heavy crude shipments to US refin- of oil is verifiably associated with breaches of
eries. However, the responses of the other three our standards, such as indigenous peoples’
banks listed in the report – Natixis (France), land rights or UNESCO World Heritage Sites.”
Rabobank (Netherlands) and UBS (Switzer- Natixis also cited concerns about the possibility
land) – have been mixed. that oil exploration activities might expand into
Rabobank reported last August that it had the Yasuni National Park as one of the reasons
already stopped financing Ecuadorean oil for its decision not to finance new transactions
exports earlier in 2020, while USB declined to in Ecuador.
say whether it would follow suit. Natixis, mean- Nevertheless, these declarations of concern
while, reported that it had not provided credits are not likely to discourage environmental advo-
to any new clients for Ecuadorean oil shipments cates or indigenous rights groups from following
since mid-2020 and was working with a smaller the example of Amazon Watch and Stand.earth
number of customers involved in such deals. by putting more pressure on banks involved in Without Western
Amazon Watch and Stand.earth have alleged, oil exports. Rather, the decision of ING, Credit
however, that Natixis financed transactions Suisse and BNP Paribas to retreat from the banks, Ecuador
involving the export of 5.5mn barrels of Ecua- Ecuadorean oil trade will probably encourage and other oil
dor’s Amazon crude in the second half of last similar initiatives – and not just in Ecuador, but
year, more than two times the volumes shipped in many other countries. producers may
in the first half. If so, Ecuador and other oil-producing states
that are trying to formulate a balanced approach have few options
Grounds for criticism to complex mixtures of financial, economic,
The banks are under fire for several reasons. environmental and social problems will have beyond turning
Some of them, of course, are environmental another problem on their hands. That is, they to China
in nature. That is, the report faults the banks for will have to figure out how to bring crude, their
providing financial support to activities that most valuable commodity, to market without
pose significant threats to vulnerable ecosys- assistance from financial institutions that want
tems, especially (though not exclusively) the to be seen as contributing to the transition away
region where the Amazon River originates. It from fossil fuels – despite the fact that the world
also criticises them for publicising their own is likely to remain dependent on fossil fuels for
commitments to containing climate change several decades yet.
while not opposing projects that may lead to oil Without Western banks, they may have few
spills, deforestation and other negative develop- options beyond turning to China, which has
ments in Ecuador. been all too willing to provide countries such
But it also lambasts them for the risks they are as Ecuador with money in exchange for guar-
incurring on socioeconomic and demographic anteed long-term supplies of oil. And if they do,
fronts. That is, it points out that oil extraction has they will be sending their oil to a country that
a disproportionately heavy impact on the indig- does not treat environmental and indigenous
enous communities that populate Ecuador’s rights issues with the same delicacy demanded
Amazon region, in that it disrupts the ecosys- of the states that have given rise to the likes of
tems that sustain these communities and their Natixis and ING. In that case, one can only hope
way of life. that climate activists will be willing to put the
It also notes that indigenous groups have same kind of pressure on China. ™

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