Watching Government: Gas grows in IFC's portfolio

Sept. 14, 2015
Sustainable energy may have a growing percentage of International Finance Corp.'s portfolio, but that doesn't mean the World Bank affiliate has written off oil and gas.

Sustainable energy may have a growing percentage of International Finance Corp.'s portfolio, but that doesn't mean the World Bank affiliate has written off oil and gas. "They have continued to be a stable part of our portfolio," said Lance Crist, IFC's global head of natural resources, during an Aug. 28 interview.

Crist explained that the world's developing nations face two main challenges: meeting growing energy demand, and trying to monetize their natural resources. Renewable technologies are gaining ground as energy alternatives grow more economic, but governments still feel economic pressure to develop natural resources, he said.

The focus has shifted increasingly to natural gas, he noted. "It has become essential because it has a substantially better climate and energy profile than coal or crude oil," Crist said. Small-scale LNG projects are helping suppliers tap previously stranded resources, he told OGJ. "The proliferation of floating LNG facilities is particularly significant."

IFC continues to finance projects that contribute to developing nations' long-term economic growth; evaluate investments to assure that deals are fair and free of corruption; help clients mitigate risks by operating within Environmental and Social Performance Standards; require publication of payments to governments; and broaden projects' benefits by assisting with community development programs and purchasing more goods and services from local suppliers.

Crist noted that in the last year, IFC worked on two large downstream gas projects in China to help alleviate air pollution and provide reliable supplies. It invested $75 million and its African, Latin American, and Caribbean Fund invested $30 million to help Seven Energy begin to develop more Nigerian gas for domestic consumption, and contributed a $300 million loan with a 17-year maturity to the Peru LNG Project's $2.05 billion financing package.

Range of projects

"Obviously, it depends on the price," Crist said. "We deal with domestically produced gas shipped through pipelines as well as LNG imports. Falling oil prices have challenged the economics."

Growing use of floating storage and regasification units-usually refitted LNG tankers that are permanently moored offshore to receive LNG for regasification and transmission to power plants and other onshore customers-is a positive trend.

"There still are challenges in Caribbean countries like Haiti, which continue to rely on diesel fuel to generate electricity," Crist told OGJ. "These are very small markets, and countries don't always have good credit. The notion of breaking a larger supply into smaller parcels is good, but no one has cracked that nut yet."

Oil still matters-less as a way to address domestic demand and more as a way to help a country address its economic and social needs, he said.