ESG 'Noose Is Tightening' on E&P Funding, as UniCredit Targets Cuts

Energy Voice recently covered a Bracewell energy roundtable discussion, where partner Jason Fox talked about independent oil and gas companies in Africa facing an increasingly difficult time in accessing funding due in large part to banks’ ESG concerns.

Fox said this was not new “but the noose is tightening quickly and ESG is the headwind. It’s not just the E that’s biting but also the G, for governance, with banks increasingly retreating from emerging markets because of additional risks, particularly concerns around corruption.”

For those E&P companies seeking financial support, the pool of capital is becoming increasingly constrained. Fox noted African banks, whether commercial development focused, were playing more of a role, while traders are also stepping up to secure resources through early financial support.

“A lot of the independents are cash rich, although more capital is being returned to shareholders,” Fox said. “Bond markets are playing a bigger role in the capital structure, helping fill some of the gap created by banks retreating. Vendor financing is increasingly a part of the picture in oil and gas M&A.”

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