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Outrage at UK's $1bn loan deal with Brazil oil giant

Ministers have reneged on coalition promise to champion British firms investing in clean energy, say Greenpeace and WWF

A British government decision to underwrite a billion-dollar loan to one of the world's biggest oil companies came under fire from environmentalists last night. Groups including WWF and Greenpeace accused ministers of reneging on a pledge not to support investment in "dirty fossil fuel".

The deal, which will see UK Export Finance guarantee a loan to the Brazilian oil firm Petrobras for deep-water oil drilling, is contrary to a government commitment that the department, which is headed by Vince Cable, the Business Secretary, and the trade minister, Lord Green, would champion British firms involved in green technologies "instead of supporting investment in dirty fossil-fuel energy production".

Joss Garman, a Greenpeace energy campaigner, said: "Ministers explicitly ruled out using taxpayer's money to support dirty fossil-fuel projects in their coalition agreement. So it's brazen hypocrisy for them to be risking hundreds of millions of pounds of our money backing dangerous deep-sea oil drilling off Brazil's coastline when they should be supporting clean energy projects. It's yet another broken promise."

Petrobras was involved in 18 major oil and gas spills between 1975 and 2001, in which 141 people were killed and about 29 million barrels of oil spilled, according to Greenpeace Brazil. In 2001, the world's largest production platform, owned by Petrobras, exploded, killing 11 workers; it then sank, causing a huge spillage of oil and gas. And in August last year Brazil's oil regulator ordered the firm to suspend operations at one of its platforms because of safety concerns.

The new loan was finalised two weeks ago and will help to fund the company's offshore exploration in the South Atlantic. A spokesman for UK Export Finance said: "We don't see the coalition agreement impacting on whether or not we support Petrobras ... Their offshore operations comply with the relevant international standards; consequently we don't consider this is a dirty fossil-fuel project."

But Margaret Ounsley, head of public affairs at WWF, said: "It is gob-smacking that the Government can argue that financial support for a process that only last year was responsible for the worst accidental oil spill in marine history in the Gulf of Mexico, is not 'dirty'. One can only wonder what they had in mind when they made their commitment to end subsidies for 'dirty fossil-fuel extraction'."

The 13-year loan agreement with Petrobras will secure the charter of several oil ships from British companies. Supplies under consideration include rigs and vessels for exploration, remotely operated vehicles, control systems, compressors, global positioning services and hardware.

It is not the first time that Britain has supported the oil company. It emerged last year that ministers underwrote loans taken out by Petrobras in 2005 so that Rolls-Royce and other firms could help build a giant oil platform now operating 78 miles off the coast of Brazil in nearly 6,000ft of water – deeper than the BP Deepwater Horizon rig that exploded last year and led to the disastrous oil spill in the Gulf of Mexico.

It emerged in October that taxpayers' money was also being used to back the development of Russian coal mines, with UK Export Finance underwriting a multimillion-pound project to refurbish and expand two mines in Siberia.