Italy’s Intesa Sanpaolo adds to list of banks shunning $14b Papua LNG project

PARIS - Italy’s largest banking group, Intesa Sanpaolo, and the Asian Development Bank (ADB) said they will not finance a US$10 billion (S$13.4 billion) liquefied natural gas (LNG) project in Papua New Guinea, as environmental groups lobby against the project being developed by France’s TotalEnergies, Australia’s Santos and US-based ExxonMobil.

Energy majors are refocusing spending on more profitable oil and gas businesses and, in many cases, pulling back from renewable investments, but they are increasingly having to turn to Chinese and other Asian lenders and use more of their own money as green financing rules and pressure from climate advocacy groups spur Western financiers to shun fossil fuels.

In a letter dated Jan 15 published on Intesa’s website and not previously reported, the bank said: “Intesa Sanpaolo does not intend to participate in the financing of the Papua LNG project.”

Intesa did not respond to a request for further comment.

The letter was a reply to a group of environmental campaigners that wrote to financiers in December 2024, urging them not to participate in the project.

Intesa and Manila-based ADB have funded similar projects in the past, notably Exxon’s first Papuan LNG project that started up a decade ago, but since then ADB has stopped financing upstream ventures.

“ADB will not support any natural gas exploration or drilling activities and will be selective in its support for midstream and downstream natural gas,” the bank’s energy director Keiju Mitsuhashi told Reuters on Feb 12.

So far, 13 banks and credit export agencies, some of which financed an earlier LNG project in Papua New Guinea, have stated that they will not lend for the new project, including Societe Generale, BNP Paribas, UniCredit, Commonwealth Bank of Australia and National Australia Bank.

TotalEnergies, which holds a leading 37.55 per cent operational stake in Papua LNG, declined to comment.

A final investment decision (FID) on the 5.4 million tonnes per year project, which would double gas production in the impoverished South Pacific nation, has been repeatedly delayed. French bank Credit Agricole pulled out as financial adviser in 2024 and has been replaced by Japan’s Mitsubishi UFJ Financial Group.

In October 2024, Papua’s state-owned Kumul Petroleum, which has the option to purchase a project stake of up to 20.5 per cent, told local press that costs had risen from an expected US$10 billion to between US$13 billion and US$18 billion, with a FID expected in late 2025 or early 2026. TotalEnergies chief executive Patrick Pouyanne last week said partners were “working hard to get it back on track at acceptable capex (capital expenditure)”.

Environmental campaign groups are pressing the finance sector not to back new oil and gas projects.

“More and more banks are recognising the severe climate and human rights risks associated with this polluting gas project and deciding they want nothing to do with it,” said Ms Rachel Deans from Market Forces, a campaign group that tracks financing for fossil fuel investments.

“Banks, including Japan’s mega banks, which have remained silent on this matter, must urgently distance themselves from this project and disclose their decision,” she said in a statement. REUTERS