Documents show government’s plans to prioritise loans in support of major oil companies
by The Guardian
The UK is planning to invest in Argentina’s controversial oil shale industry using a £1bn export finance deal intended to support green energy, according to government documents seen by the Guardian.
UK Export Finance, the government’s foreign credit agency, promised in 2017 to offer loans totalling £1bn to help UK companies export their expertise in “infrastructure, green energy and healthcare” to invest in Argentina’s economy.
Instead official records, released through a freedom of information request, have revealed the government’s plan to prioritise support for major oil companies, including Shell and BP, which are fracking in Argentina’s vast Vaca Muerta shale heartlands.
One government memo, uncovered by Friends of the Earth, said that while Argentina’s clean energy sector was growing, it was “Argentina’s huge shale resources that offer the greatest potential” for the UK.
The briefing note was prepared before a key meeting between the UK government’s trade envoy to Latin America, the UK ambassador to Argentina and Argentina’s energy minister in February this year.
Tony Bosworth, a campaigner at Friends of the Earth, said: “With the world hurtling towards catastrophic climate change, and parliament declaring a climate emergency, it’s outrageous that the UK government is continuing to back huge fossil fuel developments abroad.”
Separate records, also uncovered by Friends of the Earth, revealed that there had been no fewer than 13 meetings between the UK and oil companies operating in Argentina’s Vaca Muerta hydrocarbon reservoir since the beginning of last year.
The companies include Shell, Andina Resources, Phoenix Global Resources and Pan American Energy (PAE), a subsidiary of BP. They have contributed donations amounting to more than £40,000 to fund birthday celebrations for the Queen held at the British embassy in Bueno Aires over the past two years. There have been no meetings with renewable energy companies, according to the records.
Argentina has become a magnet for major oil companies after discovering the world’s third largest shale reserves in the world. It hopes to replicate the US energy revolution by encouraging oil companies to exploit the reserves within the Vaca Muerta region despite strong opposition from local communities.
A Guardian investigation this month revealed that the fracking industry had already caused irreversible damage to the ancestral homeland of Argentina’s indigenous Mapuche people after an oil fire burned for more than three weeks next to a freshwater lake in Vaca Muerta.
How fracking is taking its toll on Argentina's indigenous people – video explainer
Argentina delivered its first-ever export of light crude and liquified natural gas from Vaca Muerta earlier this summer, five years after local community protest was quashed by authorities using teargas and rubber bullets.
The UK’s loans to support work in Argentina have been modest to date, but are expected to rise as Argentina’s burgeoning shale industry increases production. One of the largest provisions has been for £346,000 to support BP’s PAE in the 2017-2018 financial year.
The government’s plan to support Argentina’s shale industry comes after an investigation revealed an eleven-fold increase in support for fossil fuels over the past year to almost £2bn.
The plans are strongly opposed by MPs on the environmental audit committee, which branded the UK’s foreign fossil fuel investments as the “elephant in the room” undermining the UK’s climate leadership.
The UK government legislated earlier this year to commit to a zero-carbon economy by 2050, and is preparing to host the UN’s next major climate talks in Glasgow next year. The government’s climate efforts will be led by a new sub-committee within the cabinet office to be headed by the prime minister.
“Boris Johnson’s pledge to lead the world in slashing climate-wrecking pollution will be meaningless if his government continues to back the exploitation of massive oil and gas developments in Argentina,” Bosworth said.
A UKEF spokeswoman said the credit agency’s support in Argentina was available on a case-by-case basis to all permitted business sectors, including the renewable energy sector, to ensure “that no viable UK export fails for lack of finance or insurance”. UKEF did not offer evidence that it had met any renewable energy developers in Argentina.