The Paris financial center at the bottom of the well: French financial support to shale oil and gas
In May 2020, Friends of the Earth France and Reclaim Finance published a report revealing that French banks and investors significantly support North American shale oil and gas. Entitled “The Paris Financial Center at the Bottom of the Well”, the report also gathers information about the climate, environmental, sanitary, and financial risks that this sector concentrates.
The Covid crisis and the oil crash shed a light on the already-known high risks linked to shale oil and gas. Despite many warnings, financial actors choose to remain over-exposed to these risks. Almost all French banks, insurers and asset managers did not even commit to limit their activities in shale oil and gas.
Reclaim Finance and Friends of the Earth France call on the end of public and private support to the whole sector, and the adoption of policies and rules that align French financial practices with the imperatives to stop shale oil and gas expansion and program its complete phase-out.
What we need to remember when it comes to French financial institutions funding shale oil and gas:
- Between 2016 and 2019, Société Générale, Crédit Agricole, BNP Paribas and BPCE financed shale oil and gas production, transportation, and exportation to up to 24 billion dollars.
- Société Générale is – by far – the first financial actor to support shale oil and gas, with about 11 billion dollars since 2016. Its is largely involved in gas infrastructures, pipelines, and LNG in the United States. Only BNP Paribas and Crédit Mutuel gave up on these direct financial supports.
- On March 20th 2020, the French investors, including the four big banks and AXA and Rothschild & Co, had 12 billion dollars of investments in the companies that are aggressively developing shale oil and gas.
- Between the beginning of January and the end of March 2020, when the value of American oil and gas assets was dropping, BPCE, AXA et Rothschild & Co bought 7 million of assets in these companies.
- The portfolios of these banks and investors contains companies that mainly or exclusively rely on shale oil and gas and that were violently hit by the crisis – Occidental Petroleum, Chesapeake, Concho Resources, EOG, Apache, WPX…
- In spite of its unconventional oil and gas policy, BNP is still involved with corporations highly active in the sector, enough to doubt that its commitment has been carried out. BNP Asset Management responded that they intend to apply their policy in 2020, two years after its adoption. This delay raises the question of the monitoring of public commitments taken by financial actors and justifies the implementation of sanctions.
What we need to remember about risks linked to shale oil and gas:
- 85% of the expansion of the production until 2025 is located in the United States and Canada and is almost exclusively composed of unconventional hydrocarbon.
- This expansion would consume 26% of the global carbon budget available to stay under 1.5°C.
- American companies specialized in shale oil and gas have been in deficit for the last 10 years and spent 189 billion dollars more than they generated.
- 415 firms from the sector went bankrupt since 2015, between 243 and 1 167 others could joint them before 2021 if oil prices remain between 10 and 30 dollars a barrel.
