Members of Congress, Argentinian and US Groups Call on OPIC to reject financing for fracking in Argentina

In its final meeting this Wednesday, the board of directors of the Overseas Private Investment Corporation (OPIC) will consider two major fracking projects in Argentina that would worsen the climate emergency the world is now facing.

"Drilling in Vaca Muerta will accelerate the climate crisis and push the planet further toward catastrophe," said Maria Marta Di Paola, research director from Fundacion Ambiente y Recursos Naturales (FARN). "The environmental and social impacts of these projects will hurt public health and the water, land, and air. In fact, the UN Committee on Economic, Social, and Cultural Rights has urged Argentina to reconsider the exploitation of Vaca Muerta because of its social and environmental impacts on current and future generations."

The projects, located in the Vaca Muerta basin in Argentina's Patagonia, would entail drilling and infrastructure for 110 wells, the development and operation of midstream facilities to process and transport unconventional oil and gas and refurbishment of existing facilities to support new production. Vista Oil & Gas Argentina SA and Aleph Midstream SA, the project applicants, have applied for $450 million in financing from OPIC. Further, during Argentina's G20 presidency, OPIC signed a letter of interest that includes an additional $350 million to finance a gas pipeline in Argentina.

"The US government should not be spending a single cent, let alone a total of $800 million, to exploit fossil fuels in Argentina, an upper middle-income country," said Karen Orenstein, deputy director of economic policy at Friends of the Earth US. "As the world faces a climate emergency, US funding for Vaca Muerta will add fuel to a fire that is already burning out of control."

Exploited to their maximum potential, Argentina's unconventional gas reserves could eat up 11.4% of the world's remaining carbon budget required to keep global temperature rise to below 1.5 degrees Celsius.

"The Vaca Muerta projects are bad from start to finish. They threaten the health of communities and ecosystems in the surrounding area and exacerbate the climate crisis at a time when the global community is striving to phase out fossil fuels," said Steven Feit, staff attorney at Center for International Environmental Law (CIEL). "OPIC should not put communities in Argentina and the global climate on the line to gamble on a harmful and financially risky project."

In letters sent to the Board of Directors of OPIC, members of the US House of Representatives and US Senate voiced their opposition to the project. The House letter states, "Of many concerns, a primary factor is that these projects will produce significant, damaging emissions from the fracking process that would affect air quality and water sources polluted by fracking byproducts, as well as harmful secondary emissions from the usage of the fossil fuels being produced, which the project's ESIA does not fully detail and account for."

According to a critical analysis by the Institute for Energy Economics and Financial Analysis, plans to frack Vaca Muerta are "financially risky, fiscally perilous," and are dependent on unrealistic public subsidies.

"In a context of economic crisis in Argentina, the national government spent 1% of our national budget to support private companies in Vaca Muerta," Di Paola stated.

FARN, Friends of the Earth and CIEL have identified serious flaws in the projects' environmental and social impact assessment (ESIA), which reveal the projects to be in clear violation of OPIC policy, as well as Argentinian and international law. Concerns about potential conflicts of interest and other improprieties raise further questions about OPIC's due diligence.

A 2016 Oxford study found that for the world to have a 50% chance of staying within internationally agreed limits for global warming, no new fossil fuel plants could be built after 2017, pointing to fundamental problems in OPIC's potential investments in Vaca Muerta.

On October 1, OPIC will be subsumed into the new U.S. International Development Finance Corporation (DFC).