Oil Refiners Struggling to Access Funding as Banks Shun Fossil Fuel Projects

Emmanuel Addeh in Abuja

Banks are increasingly looking to reduce their exposure to fossil fuel projects, according to refining executives, making financing more complicated for oil refiners.

Also, lenders are are demanding emission-cutting targets from the oil refiners seeking financing, Chief Executive Officer of Malaysia’s Pengerang Energy Complex, Alwyn Bowden said at an industry conference, as quoted by Bloomberg.

“If you have the word ‘refinery’ anywhere in your title, you’re not going to get finance,” Bowden noted. 

Some banks in Europe have already started to reduce funding to oil and gas projects as part of their own climate targets.

The most drastic measure yet was taken earlier this year by France’s biggest bank, BNP Paribas, which said in May that it would no longer provide any financing for developing new oil and gas fields regardless of the financing methods.

The bank also pledged to reduce its financing for oil exploration and production by 80 per cent by 2030 as part of its energy transition goals, according to oilprice.com.

Climate change is the single largest motivation of investment institutions to decide to exclude companies from their portfolios, a newly launched ‘exclusion tracker’ showed earlier this month.

Pension funds and other institutional investors in Europe have excluded some major oil and gas companies from their portfolios, while some European banks have scaled back financing for fossil fuel projects.

To mitigate the impact of drying investment in the sector, African oil producers are planning an energy bank for the continent.