"Who will finance the East African Crude Oil Pipeline?" 10 February 2022

On 1st February in Kampala’s Kololo Independence Grounds in Uganda, the long-awaited and much-delayed Final Investment Decision was signed on the East African Crude Oil Pipeline (EACOP) and the oil fields that will feed it. The ceremony was designed to signal that the companies are determined to proceed with this project, despite the immense risks to people, nature and climate. Among other dangers, the pipeline will open up the Murchison Falls National Park to oil extraction, cause tens of thousands to lose their land, interrupt forests and important wildlife migration routes, and snake along the basin of Africa’s largest fresh-water lake.

But amid all the speeches, neither TotalEnergies nor the China National Overseas Oil Company (CNOOC) – the companies building the pipeline – nor the host governments of Uganda and Tanzania, had anything to say about the US $3 billion project loan that this pipeline needs to proceed. Could it be that they are still struggling to find enough banks that are reckless enough to finance what has become the continent’s most controversial energy project?

The banks that have already said “no”

So far, fifteen banks have made clear they won’t finance the project, either with public statements or, in the case of the “big three” banks in Total’s home country of France (BNP Paribas, Crédit Agricole and Société Générale), coordinated anonymous tips to the media. This is a marker of how sensitive the topic is – banks have to weigh the reputational risk of being associated with the project against the risk of upsetting an oil major and risking future business. But as time passes, the balance of risk is tipping, and not in Total’s favour.

The banks that have sworn off include eight of Total’s largest 15 financiers, according to data collected for the 2021 Banking on Climate Chaos report. Beyond the French banks, these include Barclays, HSBC, Credit Suisse and Mizuho. In addition, all of the large South African banks besides Standard Bank (ABSA, First Rand, Nedbank and Investec) have recently made clear they are not involved, leaving Standard Bank out in the cold. Outside the banking sector, the UK export credit agency UKEF, the African Development Bank and the major insurers Zurich, AXA and Swiss RE, have also joined the crowd of financial institutions that are not prepared to support the project.

The banks that have said nothing: JPMorgan, Deutsche Bank, Mitsubishi UFJ and Natixis

With eight of Total’s biggest financiers crossed off the list, what about the rest? In the course of the last two years, we’ve had conversations with some of these banks on a confidential basis. However, several banks have stayed extremely quiet, with multiple efforts at engagement soliciting only an insistence that they cannot possibly comment. [...]