UPDATE 1-US Ex-Im bank approves $526 mln gas-to-energy loan to Guyana

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By Kemol King and Valerie Volcovici

GEORGETOWN, Guyana/WASHINGTON, Dec 26 (Reuters) - The U.S. Export-Import Bank approved a $526 million loan to Guyana for an energy project designed to double the South American country's installed electric capacity and reduce oil imports, the Guyanese government and Ex-Im said on Thursday.

The project, which falls under Ex-Im's mandate to help exporters facing competition from China, will use natural gas-powered turbines to generate electricity, Ex-Im said.

Ex-Im said the project will reduce more than 460,000 tonnes of carbon dioxide per year, or the equivalent of consuming more than 1 billion barrels of oil.

But environmental groups said the financing contradicts the Biden administration's commitment to aid the transition away from fossil fuels agreed at COP28 in Dubai last year.

Ex-Im said the loan will support a joint venture that involves Texas-based Lindsayca and Puerto Rican firm CH4 Systems, with services provided by ExxonMobil XOM.N, and will create 1,500 jobs across 11 states and territories.

The two companies had faced direct competition from China to win the Guyana contract, according to Ex-Im.

"I am especially proud to continue to support Bank priorities and charter mandates along with projects that align with the administration’s economic, energy, and national security priorities,” said Ex-Im President Reta Jo Lewis.

The project will include construction of a natural gas separation plant, a 300 MW combined-cycle gas turbine power plant and a gas supply pipeline near Guyana’s capital, Georgetown.

Friends of the Earth said Ex-Im’s support for fossil fuels since May 2023 has reached almost $3 billion and contradicts the U.S. commitment at the Organization for Economic Cooperation and Development and UN climate summits to phase out fossil fuel exports.

"Investing in solar energy in Guyana would cost less, reduce costs for ratepayers and generate more local jobs, yet Ex-Im is intent on pleasing our planet’s biggest polluters and making the Guyana people pay," said Kate DeAngelis, deputy director of international finance at Friends of the Earth.

(Reporting by Valerie Volcovici in Washington and Kemol King in Georgetown; Writing by Aida Pelaez-Fernandez; Editing by Oliver Griffin and Leslie Adler)

((Aida.Pelaez-Fernandez@thomsonreuters.com;))