Export-Import Bank gave $8.5bn to Mexico oil firm despite deadly accidents


US agency kept financing state-owned Pemex even as more than 190 Pemex workers and contractors have died in fires, explosions and collapses since 2009

Fires, explosions and collapsing offshore rigs have cost the lives of more than 190 workers at facilities run by Mexicos state-owned oil company since 2009.

Yet American taxpayers have backed loans to the company worth more than $8.5bn during the Obama years, through an obscure agency which has quietly spoiled the presidents record on climate change.

Since January 2009, the US Export-Import Bank has signed almost $34bn worth of low-interest loans and guarantees to companies and foreign governments to build, expand and promote fossil fuel projects abroad.

However, one company benefited more than any other. The Mexican state-owned oil company, Petrleos Mexicanos, or Pemex, has collected more than $8.5bn in taxpayer-backed loans and guarantees from the Ex-Im Bank.

During this period, more than 190 Pemex workers and contractors have died and more than 570 were injured as a result of fires, explosions and offshore rig collapses, according to data compiled by Columbia Universitys Graduate School of Journalisms Energy and Environmental Reporting Project and Guardian US.

The Mexican oil company has also suffered at least 31 major accidents since 2009 involving fatalities, injuries or environmental destruction and contamination including a 2013 gas explosion in the companys Mexico City headquarters that killed 37, a 2015 pipeline leak that contaminated three rivers and polluted the drinking water for half a million people, and a 2013 chemical pipeline leak that caused the evacuation of more than 1,000 people.

Yet despite this questionable track record and an injury rate that has consistently surpassed global standards, the Export-Import Bank has provided an average of more than $1bn a year to Pemex in loans and guarantees.

Theres a history of problems [with Pemex] and yet along comes the US Export-Import Bank, who provides financing, said Karyn Keenan, director of Above Ground, an Ottawa-based human rights organization that is investigates overseas companies and treatment of foreign workers. Youd think these are things that are in the public domain, and would cause [the bank] to do heightened due diligence.

More than a quarter of all fossil fuel financing by the bank since 2009 has been directed toward Pemex, including a $1.3bn guarantee in 2015 for Pemex to purchase services from Houston-based Diamond Offshore, an offshore rig contractor; and a $1.3bn guarantee in 2013 that was to support the work of San Diego-based Solar Turbines Inc, which builds industrial-size gas turbines and compressors, and the UK-headquartered Noble Corporation, which builds offshore rigs.

Seven workers died on 1 April 2015 and another 45 were injured when, at 4.30am, an oil rig off the coast of the Yucatn peninsula erupted in flames. It took 16 hours, 36 vessels and 57 helicopters to extinguish the blaze. The incident on the Pemex-operated Abkatn-Alpha platform cost the oil company $825m, according to insurance reports.

Thirty-four days later, another Pemex offshore rig collapsed, killing two and injuring 10. And just seven weeks after that, on 22 June, a third offshore rig ignited after an oil and gas leak; in this case, no one was killed or injured.

Yet on 25 June, after this run of accidents, the Export-Import Bank renewed its annual financing of Pemex operations this time for $1.5bn in US taxpayer-backed guarantees, which included support for the deadly complex where the Abkatn rig had burned, according to the banks environmental status reports.

That rig burned again eight months later, in February 2016, when a compression unit on the platform ignited, killing three and injuring eight.

Pemex refused repeated requests for comment for this article.

The companys platforms have become time bombs, said Pablo Lpez Figueroa, senior mechanical engineer and president of the professional syndicate of oil technicians at Pemex, Unin Nacional de Tcnicos y Profesionistas Petroleros.

Each month we have even more uncertainty, he said. There are mortal consequences.

Oil extraction is a dangerous industry. In the US, the industrys fatality rate is seven times higher than for workers in general.

But in Mexico where Pemex accounts for more than 95% of the countrys oil operations the statistics are even worse. According to the International Association for Oil and Gas Producers, an industry-backed group, Mexico has ranked consistently worse than the international standard for injury and fatality rates.

In 2012, government and news accounts indicate there were at least eight accidents, including gas plant explosions and refinery fires, that killed 31 and injured 52. According to the oil and gas producer trade group, Mexicos rate for lost time due to injury was 14.5 times higher than the global industry average.

But that safety record hasnt seemed to change the banks approach toward the company, which provided the company with $1.2bn in 2012.

Masud Hasan, environmental engineer at the Export-Import Bank, said safety is a primary concern when considering financing. We review health and safety guidelines, spill control mechanisms, trainings as much as physically possible.

Caroline Scullin, the banks senior vice-president for communications, said it has a solid commitment to minimizing the environmental and social impacts of projects with the application process and extending to asset monitoring throughout the life of financing.

She added the banks financing of the Mexican oil company has supported 170,000 US jobs since 2009, and that 20% of the banks transactions have gone to small businesses.

However, it is not just the companys safety record that is in question.

Locals fry fish in Snchez Magallanes to avoid the lingering taste of oil. Located on northern shore of the Lagoon del Carmen, this fishing town on Mexicos south-western coast was once surrounded by waters containing manta rays and huachinango fish.

But drilling by Pemex has spilled oil into the waters and on to the beaches, including 12 tons in 2005, according to the Mexican government. Fishing yields dropped nearly in half in 2011, according to Sociedades Cooperativas Acucolas del Golfo, a fishing organization.

You would cry if you saw what was happening here, said Magaly Marzoa, a biologist affiliated with the Technological Institute of Boca del Ro, who has been documenting the impact of Pemexs oil activity on the marine ecosystem in Snchez Magallanes.

In Tabascos interior, environmental groups say Pemex oil production has contaminated crops and drinking water.

Common reported health issues include skin lesions, respiratory problems and high rates of cancer diagnoses, said Leonor Ramrez Bautista, an advocate at the Tabasco Human Rights Committee (Codehutab).

She said funds to conduct an official epidemiological study are scarce. We are looking for remediation fining the company doesnt do any good, she said.

Nearby in the towns of Huimanguillo and Crdenas, Pemex is facing a class action lawsuit for contamination. Several environmental groups including the Mexican environmental groups Fronteras Comunes and Asociacin Ecolgica Santo Toms filed suit in 2013, charging Pemex and state regulatory bodies for contributing to and then neglecting to address 40 years of oil contamination to the soil and water.

Coconut, corn, cacao, chili and squash farmers have seen their crop yields diminish over the past decade, and acid rain has contaminated the remaining crops. Environmental groups have spent years collecting evidence on the ground as well as official government reports for contamination, remediation and compensation.

We try to demonstrate that this is a pattern. These are not isolated acts, these are a series of acts over decades, said Ximena Ramos, an environmental lawyer at the Mexican Center for Environmental Rights.

Silke Cram Heydrich, who is based at the National Autonomous University of Mexico and is considered an expert for her research into Mexican oil spills, performed an independent analysis of those documents.

The contamination originating from pipeline oil spills has not diminished with time. It continues to be the reality, she said.

Yet documenting the extent of the oil companys environmental damage is difficult.

Manuel Llano, a member of the Mexican Alliance against Fracking and founder of CartoCrtica, has documented more than 1,000 small- to medium-level pipeline oil spills over the past two years not explicitly disclosed by Pemex. His data comes from a database obtained from Agencia de Seguridad, Energa y Ambiente, a regulatory agency.

In the thousands of wells that extract hydrocarbons, many have small leaks. The information about the state of upkeep to these wells is totally opaque There is no reason for it to be that way, he said.

Along with other environmentalists, Llano accused Pemex in 2015 of illegally conducting fracking operations in Mexico for 12 years without permits, publishing map blueprints he obtained through freedom of information requests.

For Greenpeace, Pemex is one of the most contaminating entities in Mexico and most opaque in the way it operates, said Miguel Soto, of Greenpeace Mexicos toxics campaign.

On 21 April 2016, 32 workers died and more than 130 were injured at the Pajaritos vinyl chloride plant blast in Veracruz. Greenpeace Mexico ran independent tests for contamination on site and found at least 59 chemicals, including carcinogens, in soil and water samples.

These findings countered government claims that there was no contamination.

If we are not asking questions and doing scientific studies, do we not find out about it? Soto said.

The Export-Import Bank has requested the results/findings of Pemexs own investigations following certain significant incidences, said Scullin, the banks spokeswoman. She did not specify which incidents.

If the bank is financing these actors, they should be careful and call out Pemex especially for the more vulnerable communities that have been affected by the activities, said Karen Hudlet, a researcher and representative for Business and Human Rights Resource Center, a human rights watchdog group.

The US Export-Import Bank is currently unable to renew its annual financial support for Pemex.

The banks charter expired in July 2015, and although Congress voted overwhelmingly to reauthorize, the Senate has refused to hold hearings for new board members. The bank has only two board members, and it needs three to approve financial transactions exceeding $10m.

But despite the banks crippled state, investors are hopeful for Pemexs future.

On 21 December 2013, the Mexican government officially opened the Gulf of Mexico to privatization when its energy reform bill became law.

Foreign oil giants, such as ExxonMobil and Chevron, had the opportunity to bid on 5 December for rights to explore for oil and gas.

Five years from now, the Mexican oil industry will be a totally different industry from what it is today, said Adran Lajous Vargas, former CEO of Pemex and fellow at Columbia Universitys Center on Global Energy Policy.

But while the companys financial security may be assured, safety and environmental oversight is not.

Pemex has been self-regulating and basically autonomous for decades, said George Baker, whose company, Energia.com, provides back-office consulting to investors in the Mexican oil industry.

But since the Deepwater Horizon disaster in 2010, there has been a renewed effort by the industry to redefine what safety really means in offshore operations, he said, which will only become more complicated with the energy reform, as private companies compete with Pemex for oil exploration and production.

Asaf Shalev, Michael Phillis and Elah Feder contributed to this report

The Energy and Environmental Reporting Project is supported by the Blanchette Hooker Rockefeller Fund, Energy Foundation, Open Society Foundations, Rockefeller Brothers Fund, Rockefeller Family Fund, Lorana Sullivan Foundation and the Tellus Mater Foundation. The funders have no involvement in or influence over the articles produced by project fellows in collaboration with Guardian US.

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