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By Simon Jessop LONDON, Sept 18 (Reuters) \u2013 International lenders have lined up about $9.5 billion in financial support for a Russian Arctic liquefied natural gas (LNG) project, a document seen by Reuters showed, even as such projects come under greater scrutiny over climate concerns.<\/p>\n
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The $21 billion project, which received final investment approval a year ago, is expected to be launched in 2023 and to reach its full capacity of almost 20 million tonnes per year in 2026.<\/p>\n
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While the energy industry touts natural gas as a cleaner alternative to coal or crude, it is a source of carbon emissions and critics say LNG projects are hard to reconcile with the transition to a low-carbon economy envisaged in the Paris climate agreement and the European Union\u2019s Green Deal economic plan.<\/p>\n
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The interest of international institutions, however, gives a boost for the Arctic LNG 2 development, led by Russian non-state company Novatek as Moscow\u2019s plans to raise its share in the global LNG market.<\/p>\n
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Among them is French state investment bank and credit agency Bpifrance, with a recommended offer of $700 million in credit finance, the China Development Bank, expected to offer a facility worth $5 billion and Germany\u2019s Euler Hermes, with a covered facility of $300 million, the document said.<\/p>\n
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However, in a statement issued after the Reuters\u2019 story, Bpifrance said \u201cthe decision to grant a public guarantee within the framework of the Arctic LNG 2 project has not been taken\u201d.<\/p>\n
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According to the document, a number of other state-backed institutions are also expected to help fund the project including the China Development Bank, which is expected to offer a facility equivalent to $5 billion.<\/p>\n
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The Japan Bank for International Cooperation is also seen providing a facility of $2.5 billion; an unidentified Russian bank $1.5 billion and Italy\u2019s SACE a covered facility of $1 billion.<\/p>\n
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Russia\u2019s top lender Sberbank has already said it is ready to provide more than 2.7 billion euros in financing for the project, which aims to process gas from the Gydan Peninsula and ship 80% of LNG to Asia.<\/p>\n
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The line-up described in the document, if backed in full, would cover the need for the external financing, earlier estimated by Novatek at $9-$11 billion.<\/p>\n
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The project\u2019s equity partners include France\u2019s Total , China National Petroleum Corp, China\u2019s CNOOC and the Japan Arctic LNG consortium made up of Mitsui & Co and state-owned JOGMEC, formally known as Japan Oil, Gas and Metals National Corp.<\/p>\n
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Bpifrance\u2019s recommendation, which could yet be rejected by the government, highlights the importance of the project for one of France\u2019s industrial champions.<\/p>\n
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The document said Bpifrance Assurance Export gave a \u201cfavourable opinion\u201d to the strategic project guarantee \u201csubject to subsequent examination of the project\u2019s risk profile and its economic fundamentals\u201d and with a \u201cstrong reserve\u201d waiting for the finalisation of the environmental and social analysis.<\/p>\n
<\/p>\n
Total declined to comment and Novatek had no immediate comment.<\/p>\n
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Relations between Europe and Russia, including energy, remain tense after a poisoning attempt of Russian opposition politician Alexei Navalny sparked calls for another key energy project between the two, Nord Stream 2, to be ditched.<\/p>\n
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The role of European development institutions in bank-rolling LNG projects around the world has also come under greater scrutiny given the EU\u2019s ambitious climate goals.<\/p>\n
<\/p>\n
Export credit agencies such as Bpifrance provide government-backed loans, guarantees, credits and insurance to private companies to help make it easier for them to do business abroad.<\/p>\n
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