WestLB AG, a Dusseldorf, Germany- based bank, said it won’t loan to projects wanting to explore for or produce oil in the Arctic and Antarctic in a bid to cut its risk and protect the environment.
The bank has provided financing to at least 10 oil-rig or vessel projects in the three years through 2011, said Dustin Neuneyer, sustainability manager. “This is the first time a bank has explicitly excluded activity in these geographic areas,” Neuneyer said today.
“The further you get into the icy regions, the more expensive everything gets and there are risks that are almost impossible to manage,” he said. “Remediation of any spills would cost a fortune,” and the natural breaking-down of oil that benefited BP Plc (BP/) in the Gulf of Mexico wouldn’t work at freezing or near-freezing temperatures, Neuneyer said by e-mail and phone.
The bank in February published a lending policy related to offshore oil drilling and production. In 2010, it decided coal- power plants seeking loans in developed nations would need to meet minimum energy-efficiency standards. Companies including Statoil ASA (STL), Norway’s largest oil producer, and Total SA of France, Europe’s third-biggest, last year made commercial discoveries of oil and gas in the Barents Sea, the first in more than a decade.
Norway is moving into the waters off its northern tip to boost output after oil production fell by half in the past decade amid dwindling North Sea output.
“The risks and costs are simply too high,” Neuneyer said. The bank so far has not turned away business as it applies its policies, though it has changed several unspecified projects, he said. “Other banks contacted us and are very interested in this approach and policy,” Neuneyer said.
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