Financing marine destruction: the LNG boom and bank responsability

Our oceans and their rich ecosystems are under growing threat, exacerbated by the expansion of LNG (liquefied natural gas) terminals and vessels. From Latin America to Southeast Asia, companies building new LNG terminals and the banks that finance them are deepening host countries’ dependence on fossil fuels, worsening the climate crisis, and harming global biodiversity. Despite the climate commitments made by many of the world’s largest banks, they continue supporting LNG developers. To align with their pledges, banks must stop all new financial services to companies developing LNG terminals.

The third United Nations Ocean Conference (UNOC3) is taking place in Nice, with the goal of “mobilizing all actors to conserve and sustainably use the ocean.” (1) In recent years, LNG export and import terminal projects have surged, with many more in the pipeline. By 2030, developers are planning 156 new onshore and floating LNG terminals projects—64 dedicated to export and 92 to import LNG. (2) This boom has also driven the expansion of the global LNG fleet: the number of vessels has more than doubled since 2014, and is expected to reach 1,032-including 324 additional ships currently under construction. (3) This massive LNG buildout is already having significant impacts on oceans—raising questions about the role of banks financing the companies behind these developments.

As well as having a serious climate impact, LNG terminals affect marine ecosystems and coastal communities through: 

• Increased shipping traffic near terminals and along shipping routes: this leads to higher levels of underwater noise, disrupting marine life. Ocean background noise has doubled every ten years in recent decades due to increased marine traffic. (4) The rise in vessel numbers and size also increases the risk of collisions with marine animals. (5) 

• Thermal pollution: seawater used to cool fossil gas is discharged back into the ocean at higher temperatures, disrupting reproductive cycles of marine species and reducing fish populations. (6) 

• Habitat destruction: the expansion of ports to accommodate larger LNG carriers and the building of LNG terminals disrupt and further harms marine ecosystems. (7) 

• Water pollution: LNG processing and transport involve pollutants and wastewater discharge. (8) 

• Impacts on surrounding communities’ livelihoods: LNG terminals can compete for freshwater resources, (9) while fishermen are affected by the decline in fish populations. (10) 

This LNG expansion would not be possible without financial support from banks. Many of the largest banks backing LNG projects have adopted climate commitments. Some have introduced limited restrictions on ultra-deepwater drilling, such as La Banque Postale and UniCredit. (11) And yet, none have fully banned financing for new LNG projects or the companies developing them. (12) 

Plans to turn Argentina into an LNG exporter (13) are driving the expansion of fracked gas extraction in Vaca Muerta mega project, (14) the world’s second-largest unconventional gas reserve. (15)

Central to this is the “Argentina LNG” project, led by YPF, the Argentinian national company, and involving the European majors Shell and Eni. (16) According to the Banking on Climate Chaos 2024, (17) Eni received US$29 billion from the world’s largest 60 banks between 2021 and 2023. Among the top financiers were European banks: Intesa Sanpaolo and UniCredit being the two biggest. Meanwhile, YPF received US$679 million between 2021 and 2023, with Santander providing almost the whole of it.

Located on the Atlantic coast at Punta Colorada, in the Golfo San Matías, the LNG project, —estimated to cost US$30 billion— (18) includes:

• Two floating LNG (FLNG) vessels with a combined export capacity of 10 million tonnes per annum (Mtpa), operational from 2027 and 2028 onwards. (19)
• Two more FLNG units with a total capacity of over 20 Mtpa planned around 2030. (20)
• A 600 km pipeline to transport fossil gas from Vaca Muerta to the coast. (21)

In 2022, the Rio Negro province facilitated these developments by revoking the legal status of Golfo San Matías as a protected area, (22) doing so without adequate public consultation according to NGOs opposing the projects. (23) Since then, environmental groups have raised serious concerns about the impact on marine biodiversity in the project area, (24) home to several protected species- (25) especially as “Argentina LNG” adds to proposals for a new oil pipeline and oil export terminal. (26)

Located in the heart of the Coral Triangle, the VIP, often referred to as the “Amazon of the Oceans,” is a marine corridor hosting over 1,736 shore fish species and 300 coral species. The VIP currently hosts the Philippines’ two existing LNG import terminals and is the proposed site for seven more, (27) being developed by local companies such as San Miguel Corporation (SMC) and international firms like Shell. These projects could not be built without the banks’ unwavering support for these companies.

In 2023, the Philippines began relying on LNG imports, (28) and volumes have continued to grow steadily. (29) This trend is expected to persist, as the Philippines increasingly turns to gas for power generation. As a result, 12 LNG import terminal projects have been proposed, along with multiple gas power plants. (30)

This strategy contrasts sharply with the country’s abundant renewable energy potential. Estimated at around 1,200 GW, the Philippines’ renewable energy capacity could align with a 1.5˚C emissions pathway through investments in solar and wind energy, while avoiding areas of high biodiversity and protected regions. (31)

The Protect VIP coalition—a group of national and international NGOs—has raised serious concerns about the environmental impacts of this LNG boom, including increased shipping traffic in the area, home to coral reefs and other fragile ecosystems (32) and the clearing of coastal areas to build the LNG terminals. Soil from hillside areas is being dumped into the ocean, burying centuries-old marine ecosystems. (33)

With biodiversity shrinking worldwide, (34) LNG expansion is adding a new threat to marine ecosystems. Biodiversity loss also undermines climate resilience, meaning that climate pledges are meaningless without biodiversity protection. Taking new pledges -like BNP Paribas endorsing the #BackBlue Ocean Finance Commitment just before UNOC3- (35) is a proof of intent, but it is high time that banks put their commitments into practice. To do so, they must stop supporting LNG expansion, in particular halt all new financial services to companies developing LNG terminals.