Amazonian Oil Bans Prompt Ecuador to Widen Bank-Credit Network
(Bloomberg) -- Ecuador is almost doubling the number of banks allowed to provide credit guarantees on Amazonian oil exports as some of the most prestigious financial institutions shun crude harvested from one of the world’s largest river basins.
Petroecuador, as the Latin American nation’s state-owned oil producer is known, is now accepting guarantees from 750 banks compared with 386 previously, the company said in a statement. The move follows announcements by four European banks of plans to halt financing for Ecuadorian crude exports, most of which originate in the Amazon jungle. Significantly, domestic banks will be allowed to provide letter of credit for the first time in years, and Petroecuador also will begin accepting pre-payments for oil cargoes.
The new measures come “amid restrictions to market oil extracted from the Ecuadorian Amazon,” according to the statement dated Oct. 16.
Petroecuador is relaxing its credit-finance standards as banks cut ties to the fossil-fuel industry amid pressure from environmental groups and activist shareholders. Credit Suisse Group AG, ING Groep NV, BNP Paribas SA and Natixis SA said they will stop providing letters of credits that are the lifeline of the Ecuadorian oil industry. That could hamper the former OPEC member’s efforts to restore oil production that dropped to a half-decade low last year.
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