An aerial view of the Excelsior ship docked at Freeport LNG terminal; Courtesy of Freeport LNG

Support for US LNG terminals deemed as ‘backdoor’ for more gas drilling

Once the energy crisis came knocking on the countries’ doors, the support for liquefied natural gas (LNG) projects skyrocketed as nations around the globe, especially across Europe, joined hands to stave off a gas crunch and bring more LNG supplies to their citizens. This enabled the United States (U.S.) to entrench its position as the world’s largest export center for LNG. Which insurance players are enabling the operation of LNG terminals in the U.S.?

An aerial view of the Excelsior ship docked at Freeport LNG terminal; Courtesy of Freeport LNG

Over the past eight years, the 60 largest private banks in the world are said to have financed fossil fuels to the tune of $6.9 trillion, with coal, oil, and gas getting $705 billion from banks last year while financing for LNG was on the rise. Over 50 freedom of information requests to government agencies and authorities have enabled access to insurance certificates for seven existing terminals, those under construction, and those planned for expansion.

This information is contained in a recent report, titled Risk Exposure: The Insurers Secretly Backing the Methane Gas Boom in the US Gulf South,’ published by the U.S. non-governmental organizations (NGOs): Rainforest Action Network (RAN) and Public Citizen. The report is described as the first of its kind, which reveals the exact extent insurance companies from all over the world are enabling the operation of LNG terminals in the United States. Many European countries, including Germany, are sourcing most of their LNG supplies from the U.S.

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Regarding the seven U.S. LNG terminals with recent certificates, which are mentioned in the report, five are located in the Gulf of Mexico, including Freeport LNG, Lake Charles LNG, Cameron LNG, Gulf LNG, and Rio Grande LNG. In addition, there are certificates for the Southern LNG terminal, also known as Elba Island LNG, on the Atlantic coast and Tacoma LNG on the Pacific coast. 

Bekah Hinojosa from South Texas Environmental Justice Network, remarked: “Texas LNG, Rio Grande LNG and the proposed Rio Bravo pipeline, if built, would destroy the way of life of our low-income Latino community. Pollution from these massive LNG export terminals would pollute the waterways where shrimp lay their eggs and our people fish to feed their families. We call on the companies to stop insuring LNG terminals because they represent blatant environmental racism.”

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The report claims that the analysis of all the certificates makes it clear that at least 35 insurers from the United States, Europe, and Asia provide the terminals with property and liability insurance, both general and environmental. The names that most frequently pop up in these certificates are those of the U.S. insurers AIG, Chubb Liberty Mutual, and the French reinsurer SCOR, with at least 20 groups of insurers appearing in the documents being involved through the Lloyd’s of London insurance market, so-called ‘syndicates.’ 

Kerrina Williams, Public Citizen’s Climate Campaign Coordinator, noted: “AIG, like other major U.S. insurers, is portraying itself as a victim of climate change, when in reality the company is complicit in the damage and undermining its climate commitments by continuing to support LNG terminals. Affected communities deserve to know who is insuring the toxic facilities that are harming southern Gulf Coast ecosystems, their livelihoods and the health of their planet.”

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Furthermore, the certificates for four LNG plants entail the names of German insurers with operators in all cases planning to expand the terminals. This encompasses Allianz (Cameron LNG, Tacoma LNG, and Freeport LNG), Munich Re‘s subsidiaries Great Lakes Insurance & Princeton Excess and Surplus (Cameron LNG and Tacoma LNG), HDI within the Talanx Group (Cameron LNG and Gulf LNG), and Hannover Re‘s subsidiary Argenta via the Lloyds insurance market (Tacoma LNG).

Based on this report, Allianz is also involved in the LNG business as a financier. In line with this, an Allianz subsidiary made a significant contribution to a loan for the Rio Grande LNG project’s developer, NextDecade, in September 2023. ADNOC recently got its hands on an equity position in the Rio Grande LNG export project in Texas.

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Urgewald and many other players fighting to raise awareness over climate change claim that liquefied gas from the U.S. is synonymous with fracking, which is carried out using chemicals that release the fossil gas from rock layers, thus, these environmental groups believe this endangers the local drinking water supply. As a result, these NGOs and climate groups are convinced that the LNG terminals worsen the air quality in these regions and increase the risk of asthma, cardiovascular disease, or certain types of cancer.  

Regine Richter, Energy and Finance Campaigner at Urgewald, commented: “The involvement of German insurers shows that they are not living up to their own climate demands. While all four companies have now ruled out direct insurance for new oil and gas fields, their support for LNG plants is a backdoor way to encourage further gas drilling.

“They are participating in the US fossil export business, which is completely incompatible with the global community’s climate goals. It is high time that Allianz and Co. also ruled out business with infrastructure such as liquefied natural gas terminals, pipelines or gas-fired power plants.”

While Allianz, Munich Re, and HDI Global have excluded new oil and gas production projects and the construction of new oil infrastructure in the midstream sector in their climate guidelines, Hannover Re has excluded new oil and gas production projects and directly related infrastructure. 

Despite this, Urgewald emphasizes that a large gap in the climate guidelines remains for all German insurers when it comes to excluding business with new gas midstream infrastructure such as LNG terminals and pipelines and downstream infrastructure like gas power plants. 

Moreover, liquefied gas is seen as “extremely harmful” to the climate due to its energy-intensive supply chain and the methane leaks that occur during the extraction and transport of fossil gas, according to Urgewald. The German NGO underlines that methane has a more than 86 times stronger effect on global warming than CO2 over 20 years. 

Mary Lovell, Energy Finance Campaigner at Rainforest Action Network, stated: “These companies are insuring one of the largest fossil fuel growth sectors in the world while simultaneously failing communities in Texas and Louisiana.” 

Recently, the U.S. Federal Energy Regulatory Commission (FERC) gave its blessing to the Gulfstream LNG export project under development in Louisiana to kick off the pre-filing permitting process, setting off the regulatory review for the proposed 4 million tonnes per annum (mtpa) modular export facility.

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The project start-up, targeted in less than six years, is expected to coincide with a forecasted shortfall in global LNG supply exacerbated by recent geopolitical events and natural production declines in many legacy facilities.