ANZ hardens policy against bankrolling oil and gas projects

ANZ has hardened its stance against funding new oil and gas projects, joining other major banks in aligning lending with the Paris commitment to limiting global temperature increases to “well below” 2 degrees Celsius.The change to the top big business bank’s lending policies, revealed in a note buried in its half-year results published Tuesday, practically rules out direct financing of Santos’ troubled $15 billion Papua LNG project, a joint venture with TotalEnergies, the operator, ExxonMobil and JX Nippon.

It comes as Resources Minister Madeleine King is set to outline a strategy that locks in the use of gas to 2050 and beyond to back up variable wind and solar energy, including new gas projects such as Woodside Energy’s $16.5 billion Scarborough and the giant Beetaloo Basin in the Northern Territory.

ANZ’s “enhanced” oil and gas policy notes the “material and important part” gas has to play in the energy transition by firming wind and solar power, adding the bank will work with customers “with robust plans aligned with our climate policy framework, to help finance their transition”.

“At the same time, we are taking a further step towards transitioning our oil and gas lending to align with the goals of the Paris Agreement,” the policy reads.“We will no longer provide direct financing to new or expansion upstream oil and gas projects. As well, we will not on board any new customers primarily focused on upstream oil and gas.”

ANZ’s oil and gas exposures – the largest of the big four banks – totalled $5.4 billion at March 31, down from $8.2 billion in 2020, and would have to fall further to $4.9 billion to meet its 40 per cent reduction target by 2025.

Woodside’s climate transition action plan was rejected by three-fifths of shareholders voting at its annual meeting two weeks ago. The clash of priorities highlights the unresolved tension between the Paris commitments of the Albanese government and big companies, and the continuing demand for gas from traditional trading partners such as Japan and South Korea.

Mark Whelan, the head of ANZ’s institutional bank, hinted at the hardening of the bank’s stance at The Australian Financial Review Banking Summit in March, noting that it hadn’t done any new upstream, direct lending into new oil and gas for a number of years because “we’ve set the bar really high around new fields” and “if we’re not comfortable where we don’t bank it”.

Kyle Robertson, an analyst at Market Forces, an affiliate of environmental activist group Friends of the Earth, said: “Woodside and Santos can no longer obtain direct finance for their new oil and gas extraction projects from any of Australia’s big four banks”.