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| ▲ This undated file photo shows the state-run Export-Import Bank of Korea. (Yonhap) |
state-run bank-loss
Eximbank suffers huge loss from loan to U.S shale gas investor: state auditor
SEOUL, March 29 (Yonhap) -- The state-run Export-Import Bank of Korea (Eximbank) has suffered a loss of about 220 billion won (US$180 million) after granting a huge loan to a local investor in an American shale gas project without conducting a sufficient due diligence review on its investment risk, the state auditor said Tuesday.
According to a report from the Board of Audit and Inspection (BAI), Eximbank loaned $217 million (about 260 billion won) to the Seoul-based Atinum Energy, which took part in a U.S. shale gas project, from 2015 to 2016 but has failed to recover 220 billion won of the loan.
Shale gas is one of a number of unconventional sources of natural gas.
The report said Eximbank was aware that further drilling would be delayed or halted in the U.S. shale project due to falling oil and gas prices but executed the loan without taking the investment risk into account.
In December 2020, the principal sum of $180 million was written off, the report noted.
It said Eximbank set the loan limit in June 2015 based on an amount proposed by Atinum Energy. At that time, Eximbank officials estimated the net present value (NPV) of the concerned U.S. shale gas project at $313 million but eventually chose to accept an NPV of $491 million calculated by a company close to Atinum Energy, it said.
Moreover, the Eximbank officials obtained a report from a co-investor that stipulated the suspension of shale gas drilling in the second quarter of 2015 due to falling oil and gas prices but wrote in their loan review report that the concerned oil and gas fields can be developed continuously even during a period of declining oil prices.
In the end, Atinum Energy failed to repay the principal and interest by September 2019, the maturity date of the loan, the report said.
BAI said it has demanded disciplinary action for two Eximbank officials accused of overestimating the loan limit without any reasonable grounds.
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