SEOUL, March 29 (Yonhap) — Korea’s state-owned Export-Import Bank (Eximbank) has suffered a loss of about 220 billion won ($180 million) after extending a huge loan to a local investor in a U.S. shale gas project without conducting sufficient due diligence on its investment risk, the state auditor said on Tuesday.
According to a report by the Board of Audit and Inspection (BAI), Eximbank lent $217 million (about 260 billion won) to Seoul-based Atinum Energy, which participated in a U.S. shale, from 2015 to 2016, but failed. recover 220 billion won from the loan.
Shale gas is one of many unconventional sources of natural gas.
The report said Eximbank was aware that new drilling would be delayed or halted at the US shale project due to falling oil and gas prices, but executed the loan without considering the investment risk.
In December 2020, the principal sum of $180 million was written off, the report notes.
He said Eximbank set the lending limit in June 2015 based on an amount offered by Atinum Energy. At that time, Eximbank officials estimated the net present value (NPV) of the affected US shale gas project at $313 million, but ultimately chose to accept a NPV of $491 million calculated by a company close to Atinum Energy, he said.
Additionally, Eximbank officials obtained a report from a co-investor stipulating 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 relevant oil and gas fields can be developed continuously even during a period of declining oil prices.
In the end, Atinum Energy failed to repay principal and interest by September 2019, when the loan matured, according to the report.
BAI said it demanded disciplinary action against two Eximbank officials accused of overestimating the loan limit without any reasonable grounds.