Italy's largest banking group, Intesa Sanpaolo, and the Asian Development Bank (ADB) have announced they will not fund a $10 billion LNG project in Papua New Guinea. The project, spearheaded by France's TotalEnergies, Australia's Santos, and U.S.-based Exxon Mobil, is facing resistance from environmental groups.
Major energy companies are redirecting investments from renewables back to more lucrative oil and gas ventures. Consequently, they are seeking alternative sources of funding due to green financing regulations and mounting pressure from climate advocacy groups that are causing Western financiers to distance themselves from fossil fuel projects.
In a recently uncovered letter dated January 15 and published on Intesa's website, the bank stated, "Intesa Sanpaolo does not intend to participate in the financing of the Papua LNG project." Despite requests for further comments, Intesa did not provide additional clarification.
Following a plea from environmental activists in December, Intesa and the ADB, previously known for supporting comparable initiatives, have decided to refrain from backing natural gas exploration. ADB's energy director, Keiju Mitsuhashi, underscored the bank's selective approach by confirming its reluctance to finance upstream natural gas activities.
Out of the 13 financial institutions and credit export agencies that have disapproved of funding the project, some previously backed endeavors in Papua New Guinea. Among those abstaining are Societe Generale, BNP Paribas, UniCredit, Commonwealth Bank of Australia, and National Australia Bank.
The final investment decision on the project, set to double gas production in the economically challenged South Pacific nation to 5.4 million metric tons annually, is pending. Despite challenges, efforts are underway to streamline the project, with TotalEnergies' CEO, Patrick Pouyanne, expressing commitment to get it back on track with acceptable costs.