LNG export boost would increase prices and hurt climate, US says
Energy secretary says household gas bills could rise by $100 a year if pause on permits is lifted
The future of America’s natural gas export boom was thrown into doubt after a federal government report found that unbridled expansion would drive up costs for Americans and undermine climate goals.
A long-awaited Department of Energy study released on Wednesday found that the rapid growth of the country’s liquefied natural gas sector might not be in the national interest, setting the stage for sweeping legal challenges that would hinder expansion just as Donald Trump takes office with a pledge to boost exports in pursuit of US energy dominance.
“The main takeaway is that a business as usual approach is neither sustainable nor advisable,” energy secretary Jennifer Granholm said. “Increasing exports unconstrained would surely generate more wealth for the LNG industry. But American consumers and communities, and our climate, would pay the price.”
The report forecast wholesale domestic natural gas prices would surge by as much as 30 per cent and the average American household would pay more than $100 extra annually on their gas bills, said Granholm.
The US LNG industry has grown exponentially since its establishment less than a decade ago, turbocharged in recent years by European demand for American molecules following Russia’s full-scale invasion of Ukraine.
Last year, the US overtook Australia to become the world’s biggest LNG exporter, shipping 11.9bn cubic feet a day — enough to satisfy the combined gas needs of Germany and France. The industry has ambitious plans to double exports by the end of the decade.
But President Joe Biden halted licensing new export terminals in January of this year as his administration carried out a review of the costs and benefits of the boom, prompting a backlash from the oil and gas industry.
The study is likely to be disregarded by Trump, who has vowed to restart licensing on the first day of his second administration. The oil and gas industry has long argued that LNG exports would benefit the climate by weaning the world off coal, the dirtiest fossil fuel.
The American Petroleum Institute, an oil and gas industry lobby group, disputed many of the report’s findings, saying Americans enjoyed among the lowest natural gas prices in the world and the “politically motivated pause” on LNG permits should now be lifted.
But the energy department’s report found direct emissions from the US LNG industry would reach 1.5 gigatonnes annually by 2050 — about a quarter of total current US emissions, according to Granholm. Additional US LNG exports would also displace more renewables than coal globally, she said.
It also said expanding American LNG exports could undermine, rather than boost, domestic energy security, according to Granholm.
Granholm said expanding LNG supply in the years ahead would no longer support close allies such as Europe and Japan, as it has until now, but rather could aid China, a rival.
“Looking ahead, China’s LNG exports are expected to nearly double between now and 2030, and China’s LNG imports are expected to be the highest of any country through 2050,” she said.
Databricks raises $10bn in the biggest US venture deal this year
Investors in the AI and data analytics group include Thrive Capital, Andreessen Horowitz and Insight Partners
Databricks has raised $10bn in the biggest venture capital deal of the year, giving the US data analytics and artificial intelligence company a valuation of $62bn.
The company raised the cash from some of the largest and most active technology investors in the US, including Thrive Capital, Andreessen Horowitz, Insight Partners and Iconiq Growth.
The funding round for the 11-year-old company is exceptionally large by the standards of venture capitalists, who historically have funded early- stage start-ups at much lower valuations. The deal is a reflection of how VCs are shifting tack as private markets balloon.
The new capital will help Databricks compete with AI start-ups such as OpenAI and Anthropic for talent, said Ali Ghodsi, co-founder and chief executive of Databricks.
“The talent war for AI is like no other time before. Already it was pretty insane levels of compensation for software engineers in Silicon Valley, and it’s gone up from there,” he said.
Thrive alone invested “at least” $1bn into the round, according to Vince Hankes, a partner at the firm, which recently raised a $5bn fund. Thrive, founded by Josh Kushner, has made a series of massive bets in companies including Stripe and OpenAI. Databricks “are in this to build the next $1tn infrastructure company”, said Hankes.
The “vast majority” of the $10bn will go towards helping employees at the start-up cash out lucrative stock options and to pay the taxes they incur when those options vest, according to Hankes. He compared the deal to Stripe’s $6.5bn raise last year, which allowed the payments company to meet billions of dollars of tax liabilities associated with employees’ stock units.
Many start-ups that have remained private for a decade or more are facing a similar issue: many stock units are taxed as income when they vest, while others cannot be realised until a company has a liquidity event, leaving employees with either large tax bills or the bulk of their wealth effectively tied up.
Finding ways to “release the pressure” for employees would help start-ups such as Databricks compete for talent with public companies such as Alphabet, where employees can sell their shares at any time, said Hankes.
Providing early employees a way to sell their stock has been a motivating factor behind many of the largest deals for venture-backed companies over the past year, including at AI company OpenAI and Elon Musk’s SpaceX.
The remainder of Databricks’ new capital will be invested into “new AI products, acquisitions, and significant expansion of its international go-to-market operations”, the company said on Tuesday.
Other investors in the round include Singaporean sovereign wealth fund GIC; early Twitter and Facebook investor Yuri Milner’s DST Global; and MGX, a recently launched UAE fund focused on AI and chaired by the country’s powerful national security adviser, Sheikh Tahnoon bin Zayed al-Nahyan.
Databricks has grown rapidly in the past year and was expecting annualised revenue to hit $3bn by the end of next month, the company said on Tuesday. Databricks also expects to record positive free cash flow for the first time at the end of January.
That has pushed Databricks’ valuation up from $43bn in September last year.
The new capital and growing revenue meant Databricks is not in a rush to go public, said Ghodsi. “The absolute earliest we would go public is next year, but we have flexibility now.”
Crédit Agricole chooses veteran Olivier Gavalda as next chief executive
New boss of France’s second-largest bank faces challenging domestic economy and threats in Italy
Crédit Agricole has chosen Olivier Gavalda to replace outgoing chief executive Philippe Brassac, appointing a company veteran to steer France’s second-largest bank through a rocky economic period in its domestic market and fresh challenges in Italy.
Like Brassac, Gavalda has spent his entire career at Crédit Agricole and is considered a safe pair of hands who knows the co-operative bank’s network well, having led its operations in both Champagne Bourgogne and Ile-de-France, the region that includes Paris.
He will be charged with maintaining the bank’s steady performance of recent years, which has helped Crédit Agricole surpass Société Générale to become the second-largest French bank by market capitalisation.
But French bank stocks have been hit by political turmoil, including the collapse of Prime Minister Michel Barnier’s government and a budgetary crisis. Moody’s earlier on Tuesday downgraded Crédit Agricole and six other French banks over a weakening outlook for the country’s public finances.
Gavalda will also face the delicate task of protecting the bank’s interests in Italy, its second-largest market after its home country.
Crédit Agricole has recently sought to increase its stake in Italy’s Banco BPM from 9.9 to 15.1 per cent, and is seeking approval from Italian regulators to own as much as 19.9 per cent of the Italian lender.
The move is considered a means of defending Crédit Agricole’s interests in Italy and gain leverage in talks with UniCredit chief executive Andréa Orcel, who launched a surprise €10.1bn takeover bid for Banco BPM last month.
During his time in the role, Brassac has succeeded in selling off less strategic areas of the business, simplified Crédit Agricole’s structure and reaped gains from its asset management arm Amundi.
Brassac has also expanded the bank’s Italian operations since his appointment in 2015, including through Amundi, the European asset management giant in which Crédit Agricole holds a near 70 per cent stake.
Amundi has a close relationship with UniCredit through its acquisition of the Italian bank’s asset management division Pioneer division in 2017. But that relationship is “indirectly at stake” as part of the discussions over Banco BPM, analysts from Barclays said in the wake of the Banco BPM bid.
Brassac will not step down until May 2025, after the bank’s next general assembly, when he will be over the age of 65 and too old to seek a renewal of his term, according to Crédit Agricole’s protocols.
People familiar with the bank said that Gavalda was considered a “safe pair of hands” who would be able to communicate effectively with the many different regional banks that form part of the co-operative Crédit Agricole operations.
“Succession is important at any bank but it’s very, very important at Crédit Agricole,” said one banker. “There are 39 regional banks to manage. Brassac has been very good at that.”
But several people familiar with the bank said prior to the announcement that one drawback was Gavalda’s age.
At 61, he will have limited time to make his mark as the head of the bank before he too is forced to step aside.
Navantia to rescue shipbuilder Harland & Wolff
UK government offers more generous terms on Royal Navy contract to Spanish defence group for ailing Belfast company
Navantia is set to announce on Thursday it will rescue ailing UK shipbuilder Harland & Wolff after the British government offered the Spanish defence group more generous terms on a contract to build three Royal Navy vessels.
The agreement will protect the 1,200 jobs at H&W’s four shipyards in Northern Ireland, Scotland and Devon.
Navantia has agreed to buy the four yards, preserve all jobs, and also pay outstanding back pay to workers, said people familiar with the situation.
In return, the UK has offered more generous terms on a £1.6bn contract to build a trio of Royal Navy vessels used to transport supplies to aircraft carriers. It was not immediately clear how much more the UK has offered.
Navantia had no immediate comment. Russell Downs, the restructuring expert brought in as H&W interim executive chair, did not immediately reply to a request for comment.
The crisis at H&W, which built the Titanic ocean liner a century ago, has been an early test of the new Labour government’s approach to industrial strategy.
H&W’s parent company had its Aim-listed shares suspended in July, just three days before the UK general election.
Jonathan Reynolds, Labour’s business secretary, subsequently rejected a request for a £200mn loan guarantee from the parent company, which then fell into administration in September.
Yet Reynolds has led cross-Whitehall efforts involving the Treasury and Ministry of Defence to preserve H&W and keep the four yards going without any job losses, according to government officials.
Navantia and H&W have been working together on the £1.6bn contract to build three fleet solid support (FSS) tankers for the Royal Fleet Auxiliary, the civilian branch of the Navy.
The Spanish group has also been providing regular financing to the Belfast-based company since the autumn.
But Navantia had made clear it would not do the deal unless the British government revisited the original terms of the agreement, at one point requesting an extra £300mn, the Financial Times reported.
The vessels are due to be built in blocks at H&W’s yards in Belfast and Appledore in Devon, as well as at Navantia’s main site in Puerto Real in Cádiz — with final assembly in Belfast.
That would result in the first ship being finished at H&W Belfast’s yard in more than two decades, in a major fillip to Northern Ireland’s manufacturing sector.
H&W more than tripled its revenues in 2023 and halved its operating losses to £24.7mn.
Yet the company ran into difficulties as interest payments surged on its expensive debt from US hedge fund Riverstone Credit Management.
Matt Roberts, GMB national officer, said the news of H&W’s rescue was very welcome. “This is good news for UK sovereign capability and capacity in renewables and shipbuilding, but challenges remain,” he said. “Without proper investment into local skills and facilities at all four yards, and the onshoring of orders, the doom loop will be in danger of coming back. The GMB will hold both Navantia and government’s feet to the fire to ensure promises are kept.”
Nissan and Honda hold talks about a merger of the two carmakers
The Japanese companies are grappling with fast-growing Chinese rivals and sluggish consumer demand for EVs
Nissan and Honda are in exploratory talks about a merger of the two carmakers that would create a $52bn Japanese behemoth, according to two people briefed on the matter.
The two companies are studying a way to combine that would help them better compete at a time when traditional carmakers are contending with fast-growing Chinese electric-vehicle manufacturers, and slower-than-expected consumer demand for EVs.
The talks between Nissan and Honda are at an early stage, and there are concerns about a potential political backlash in Japan because a merger of two of the country’s most storied automobile brands could result in significant job cuts, one of the people with knowledge of the discussions said.
This year shares of Nissan, which has a cross-shareholding structure with France’s Renault, have fallen 40 per cent.
The Japanese company has been searching for an anchor investor for several months, and the Financial Times reported in November that “all options” were being considered, including a merger with Honda. Nissan and Honda already have a partnership to develop and sell EVs.
The talks between Nissan and Honda were first reported by Nikkei. Nissan said: “The content of the [Nikkei] report is not something that has been announced by either company.”
It added: “As announced in March this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other’s strengths. If there are any updates, we will inform our stakeholders at the appropriate time.”
Honda did not immediately respond to a request for comment. Renault declined to comment.
Thames Water rival bondholders face off in court hearing
Troubled utility seeks approval for ‘urgent’ £3bn loan from its top-ranking lenders
Thames Water’s rival classes of bondholders took aim at one another in a London high court hearing, in which the troubled utility set out its case for taking an emergency loan of up to £3bn from its top-ranking lenders.
Junior bondholders claimed in written documents submitted to Tuesday’s hearing that the company’s more senior creditors were “holding [Thames Water] to ransom” through the onerous terms of their “extremely expensive” loan, which they argued was “having a chilling effect” on the utility’s parallel attempts to raise equity from new investors.
The court hearing, which Thames Water said was “urgent”, is the first step by the UK’s largest water and sewerage company to gain court approval for borrowing up to £3bn from its top-ranking “class A” bondholders. Without it, the company, which has a near-£19bn debt pile, “will run out of available liquidity on 24 March 2025”, according to court documents.
The loan is part of the utility’s attempt to avoid being temporarily renationalised under the government’s special administration regime. Thames Water serves 16mn people in and around London.
The loan proposal has led to an increasingly acrid spat between the company and its lower-ranking bondholders, which claim that the utility has not properly considered their rival offer of an equivalent £3bn loan at cheaper cost and more advantageous terms.
These so-called class B bondholders are now looking to challenge proceedings and launch their own parallel restructuring plan, which lawyers say will be the first time a judge has been asked to consider rival proposals since the new restructuring regime Thames Water is utilising came into force in 2020.
Thames Water’s barrister told the court on Tuesday that the proposed loan was “not itself a comprehensive solution to Thames Water’s financial difficulties”. Instead, Thames Water is borrowing the money in order to extend its liquidity until the regulator, Ofwat, determines how much it and other water companies can raise customer bills by. That determination is scheduled for Thursday.
For their part, senior bondholders described their rival group’s proposal as an “unimplementable distraction to further its own interests”.
A barrister representing the class A creditors told the court that arguments that their loan would have a chilling effect on Thames Water’s planned parallel equity raise “seem implausible”, while arguing that the junior bondholders were simply looking to “draw out the timeline” in proceedings in the hope of “improving their position”.
As well drawing the ire of junior bondholders, the class A loan proposal has also attracted criticism from campaigners, academics and experts, who have hit out at the loan’s high 9.75 interest rate and other charges that could cost the utility as much as £800mn over 2.5 years.
A group of campaigners staged a protest outside the Royal Courts of Justice on Tuesday, calling on environment secretary Steve Reed to “block the High Court signing off a Thames Water bailout”.
Oxfordshire-based charity Windrush Against Sewage Pollution also wrote a letter to the court last week asking for evidence to be considered on behalf of Thames Water’s bill payers, which the group argued have “no say” in proceedings despite being “creditors in waiting”.
A judge can approve a restructuring plan if it has approval from at least 75 per cent of each class of creditors — but failing that, will consider a plan that leaves none of the company’s creditors worse off under the so-called “relevant alternative”.
hames Water is nearing a market-led solution — but at what cost?
The company has argued that the relevant alternative to their loan is special administration, which its expert analysis shows would result in a total wipeout for class B bondholders, compared to a token 3.5 per cent recovery in a future restructuring of Thames Water’s debt.
The class B bondholders claim that there is still “insufficient clarity” on what a special administration would look like, however.
Thames Water’s 131-page analysis, prepared by advisers at Teneo, underscores how disastrous a special administration could be for all bondholders, projecting that the senior group could get back less than half of their money if Thames Water fell into the regime without a favourable Ofwat deal on bill increases.