Bloomberg News

Russia Gas Project’s U.S. Credit Halted Amid Obama’s Sanctions

March 31, 2014

The U.S. Export-Import Bank halted a review of financing for a Russian natural-gas export project after the Obama administration imposed sanctions on individuals including a billionaire with a stake in the facility.

The bank, which provides credit assistance for companies to buy U.S. goods and services, is no longer considering support for OAO Novatek (NVTK)’s Yamal liquefied natural gas project in Siberia, spokesman Lawton King said today in an e-mail.

“Ex-Im Bank has not provided any support for the Yamal LNG project,” he said. “We have suspended it subject to any further developments -- even though the company ownership percentage does not rise to the levels of the sanctions criteria.”

The bank’s ties to Russia are fueling criticism from opponents who say the lender’s actions distort markets by favoring certain companies. Those connections, revealed in U.S. sanctions on Russia for its military intervention in Ukraine, may galvanize foes as the bank presses Congress for reauthorization in September.

“We don’t believe the Export-Import Bank should exist at all, let alone even consider loans to Russian oligarchs,” Barney Keller, a spokesman for the Club for Growth, a Washington-based group that backs limited government, said by phone today. “It’s just a form of corporate welfare, and it should be eliminated.”

Boeing, Caterpillar

The bank in the past 18 months approved loan guarantees and insurance for sales to Russia by U.S. suppliers including Boeing Co. (BA:US), Cargill Inc., Caterpillar Inc. (CAT:US) and General Electric Co. (GE:US), according to U.S. government data. Such financing is part of routine operations for the bank, which has a $140 billion lending limit.

In response to Russia’s military escalation in Ukraine, President Barack Obama this month froze the assets and restricted travel of 31 Russians and Ukrainians. Those affected include billionaire Gennady Timchenko, who owns 23.5 percent of Novatek, Russia’s second-largest gas producer after OAO Gazprom. (OGZD)

The company won’t be affected by sanctions on Timchenko, Leonid Mikhelson, the company’s co-owner and chief executive officer, told reporters in South Korea last week.

The Yamal project, a venture between Novatek and France’s Total SA (FP), would ship the fuel from the mouth of the Ob River in northern Siberia to markets in Europe and Asia, according to Total’s website.

King said the bank had decided during the week of March 16 to suspend consideration of financing for the Yamal project, because of U.S. sanctions. The decision to halt the review was first reported by the Huffington Post.

In response to a question about possibly suspending review of other projects related to Russia, King said the lender monitors the sanctions list daily to ensure it is in compliance.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net Steve Geimann, Jodi Schneider


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • BA
    (Boeing Co/The)
    • $131.24 USD
    • 1.21
    • 0.92%
  • CAT
    (Caterpillar Inc)
    • $93.72 USD
    • 0.22
    • 0.23%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus