Export-Import Bank of the United States (EXIM) President and Chairman Kimberly A. Reed yesterday joined co-chairs of the Congressional Energy Export Caucus in a U.S. liquefied natural gas (LNG) roundtable discussion moderated by Fred H. Hutchinson, President and CEO of LNG Allies, and hosted by LNG Allies and U.S. LNG industry leaders. Chairman Reed announced a new EXIM LNG product memo related to EXIM’s ability to support U.S. LNG offtake export contracts.
Also participating in the discussion were bipartisan Congressional Energy Exports Caucus Co-Chairs Rep. Carol Miller (WV-3), Rep. Jodey Arrington (TX-19), and Rep. Henry Cuellar (TX-28). Industry executives included:
• Octávio Simões, President and CEO, Tellurian Inc.
• Jillian Evanko, CEO and President, Chart Industries
• Thomas P. Mason, Executive Vice President, General Counsel and President LNG, Energy Transfer
• Aaron Neus, Senior Vice President, Strategy and Development, Freeport LNG
• Martin Hupka, Chief Commercial Officer and General Counsel, Sempra LNG
• Brendan Duval, Founder and CEO, Glenfarne Group
During the roundtable discussion, EXIM Senior Vice President and General Counsel David Slade also delivered remarks outlining the analysis from the new LNG product memo, underscoring EXIM’s broad authority to issue guarantees and insurance to facilitate exports to contribute to U.S. employment, and focusing in particular on its ability to protect long-term lenders to domestic projects against the risk of non-performance by foreign off-takers.
“The global liquefied natural gas market is fiercely competitive—and EXIM’s financing solutions can help bring reliable American energy to countries all across the world, while also reducing emissions,” said Chairman Reed. “From the outset of my tenure as Chairman of EXIM, I prioritized support for U.S. LNG exports, and this new EXIM LNG Product Memo is part of this effort. Our vision is that every nation should harness innovation to develop every energy source they have, and LNG is a vital category of U.S. exports and jobs. I thank our Congressional LNG leaders—Rep. Carol Miller, Rep. Jodey Arrington, and Rep. Henry Cuellar—as well as LNG Allies and its industry partners who joined us yesterday in supporting the export of U.S. energy.”
“Tellurian has enjoyed working with Chairman Reed to help promote the export of U.S. natural gas to meet the challenges of decarbonization and eliminate energy poverty around the world and at the same time creating thousands of jobs in the U.S.,” said Octávio M. C. Simões, President and CEO of Tellurian.
In the new LNG product memo, EXIM was asked to advise as to whether it has the legal authority to provide financing support that covers the risk of non-performance by a foreign sovereign or quasi-sovereign off-taker under a long-term export contract with the owner of a U.S. domestic commodities production facility.
The memo concludes that:
EXIM has broad authority to issue guarantees and insurance to facilitate exports so as to contribute to U.S. employment. Historically, EXIM’s long-term products provide direct financing support for the export of capital goods and services. Here, EXIM would be guaranteeing or insuring against the risk of non-performance by a foreign off-taker of domestically produced commodities under an export contract which serves as the primary revenue source for a domestic project and the primary source of security for domestic providers of finance. However, nothing in EXIM’s Charter prohibits it from providing support of this nature, and such support would literally satisfy the requirements of aiding in the financing and facilitation of exports and contributing to employment in the context of transactions of this type. Moreover, though EXIM does not currently offer a product of precisely this type, it does offer somewhat analogous comprehensive and political risk guarantees and credit insurance products in the context of the types of transactions it has more traditionally supported.
EXIM’s current oil and gas exposure is $11.9 billion, which makes up 25.6 percent of the agency’s total exposure of $46.6 billion. Earlier this month, EXIM finalized its first-ever U.S. LNG export transaction in support of 200 American jobs. Previously, EXIM’s Board unanimously approved a $4.7 billion deal supporting U.S. exports for the development and construction of an integrated LNG project in Mozambique that is anticipated to support 16,700 American jobs over the five-year construction period.
On August 21, 2019, Chairman Reed hosted a roundtable discussion and teleconference with LNG business leaders, including the American Petroleum Institute, Center for Liquefied Natural Gas, LNG Allies, and the U.S. Chamber of Commerce to discuss ways EXIM can assist with increasing the volume of domestic LNG exports. On March 5, 2020, Chairman Reed delivered remarks at a U.S. LNG export hosted by the U.S. Trade and Development Agency (USTDA), U.S. Chamber of Commerce’s Global Energy Institute, and LNG Allies, where she underscored EXIM’s commitment to USTDA’s U.S. Gas Infrastructure Exports Initiative, which is designed to connect American companies to export opportunities across the gas value chain in emerging economies.