Engineering firm Wood, know to OEDigital audience for its services in the space of offshore oil and gas, said Thursday it had agreed a $600 million (£430m) loan with UK Export Finance, the UK government's export credit agency, which will help the company take advantage of new opportunities as the energy transition accelerates. This is the first-ever green transition loan backed by UK Export Finance (UKEF).
"Wood is the first company to access the Transition Export Development Guarantee (TEDG), a new facility set up to support UK exporting companies with working capital to invest in low-carbon growth markets including renewables, hydrogen. and decarbonization," Wood said
UKEF said its guarantee would help Wood to enhance its clean growth exports and develop green jobs across the UK.
The TEDG is a five-year term loan, effective from July 2021, from a group of six of Wood's relationship banks (ABN Amro Bank plc, BNP Paribas, Citi, HSBC UK Bank plc, Lloyds Bank plc and The Royal Bank of Scotland plc) that is 80% guaranteed by UKEF. The facility is competitively priced and extends the maturity of Wood's facilities to allow long-term investment in the growth of its business, Wood said.
The facility includes KPIs linked to growing export revenue related to energy transition and sustainable infrastructure, reductions in scope 1 and 2 carbon emissions, and financial covenants in line with Wood's existing facilities.
Under the agreement, Wood will commit to increasing its clean growth portfolio and significantly reducing its greenhouse gas emissions over the five-year tenure of the facility.
Wood employs nearly 7,000 people across the UK and generates nearly £400 million annually from its exports. The company expects its export revenue, related to low-carbon projects, to significantly increase as the energy transition gathers pace and the loan will help them capitalize on these opportunities, supporting green jobs at the firm, UKEF said.
Low-carbon future
UK International Trade Secretary, Liz Truss, said: "Green trade presents a major economic opportunity for Britain that will drive high-value jobs in every part of the nation. Wood has already made great strides in repositioning its business for a low-carbon future. I am delighted it is the first company to energize its clean growth plans using UKEF’s new Transition Export Development Guarantee, which will support thousands of green jobs."
UK Government Minister for Scotland David Duguid said: "It’s fantastic to see the UK government’s first Transition EDG going to a Scottish-based company, helping support low carbon jobs right across the whole UK."
"As we prepare to host COP26 in Glasgow later this year, this announcement marks another important milestone in the UK’s energy transition, showing how free trade will help deliver on our net-zero targets."
Robin Watson, Chief Executive at Wood said: "We recognize the unstoppable momentum behind the energy transition and are committed to providing the practical solutions to help deliver a net-zero future. We are already well advanced with our own transition, deliberately broadening our portfolio across the energy and supporting our clients to achieve their own carbon reduction goals."
"UKEF’s support will allow us to accelerate this journey and capitalize on the many opportunities emerging as we build the low-carbon energy systems of the future."
The green loan news comes just a day after Wood said it expected continued growth in the carbon capture utilization and storage market, with circa $500M worth of potential CCUS projects coming to market in the medium term.
"Wood has strengthened its position across the Carbon Capture Utilisation and Storage (CCUS) value chain through a series of new wins in the first half of 2021. As clients focus on aligning their operations to support a net-zero future, Wood has secured more than 20 individual CCUS related contracts since the beginning of the year to accelerate decarbonization and emissions reduction activities," Wood said Wednesday. Read More.