Why The U.S. Just Invested $500 Million Into A Foreign Country’s Oil Company

The United States is pumping $500 million into Bahrain’s oil and gas fields, in what analysts call an “unusual” but clearly “geopolitical” investment that pits the Biden administration’s climate goals against its need to shore up a key ally in a region where war is increasingly straining Washington’s relations.

The Export-Import Bank, the U.S. federal government’s official export credit agency, said Thursday in a press release that the financing would fund energy efficiency and solar projects in the Gulf kingdom’s existing fields, insisting the funding “is not expected to result in a meaningful increase in oil and gas production.”

But the project includes drilling 400 new oil wells and 30 new gas wells, increasing its overall emissions of planet-heating pollution to more than 1.4 million metric tons per year, according to the Ex-Im Bank’s own environmental impact analysis.

The investment, the bank’s largest in overseas oil and gas in years, fails all three litmus tests that climate campaigners say might typically help justify financing foreign production with taxpayer dollars when the U.S. is ― in the federal Energy Information Administration’s own words this week ― “pumping more crude than any other country, ever” and smashing records in gas drilling.

“Maybe it’s a really small transaction, or maybe it’s a least-developed country or maybe it’s downstream and will help provide more energy access ― those are the three main excuses we see for why countries approve an oil and gas investment like this,” said Nina Pušić, an expert on export financing at the green group Oil Change International. “None of these apply in Bahrain.”

Bahrain’s crude output is small compared to the U.S. or neighboring Saudi Arabia, with which it