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Highlights
- Two more financial institutions decline funding for the Papua LNG project.
- Total count of banks distancing from the project reaches 13.
- Environmental and financial concerns cited as key reasons.
The Papua LNG project in Papua New Guinea, involving (ASX:STO), is facing increasing financial hurdles as two more banks have opted out of providing funding. Italy’s Intesa Sanpaolo and the Asian Development Bank have decided against financing the project, joining a growing list of institutions stepping back from the venture. This brings the total number of global banks that have declined funding to 13.
The decision follows pressure from multiple environmental groups, including Market Forces, which has been advocating against financial backing for the project. A letter from 31 non-governmental organizations reportedly influenced the banks' decision, citing concerns over climate impact and financial risks. These organizations argue that the project could hinder global efforts to maintain temperature rise within 1.5 degrees Celsius.
The Papua LNG project is led by France’s TotalEnergies, with (STO) holding a significant stake. The project has already faced challenges, including a pause in work towards a final investment decision last year due to escalating costs. This delay was aimed at redesigning and restructuring the project to manage expenses more effectively.
As financial institutions reconsider their involvement, discussions around environmental sustainability and economic viability continue to shape the outlook of major resource projects. The increasing reluctance from banks highlights the growing scrutiny of fossil fuel investments amid global climate commitments.
