TheChek News Flow

White House move freezes progress for 17 proposed terminals while current shipments continue

The Biden administration will indefinitely pause approvals for new liquefied natural gas export terminals along the US coastline, dealing a blow to a booming industry and giving a win to climate campaigners. 

The US is the world’s biggest exporter of LNG, with the number of cargoes shipped growing rapidly since the first set sail from Louisiana in 2016. The European energy crisis triggered by Vladimir Putin’s full-scale invasion of Ukraine bolstered demand as countries searched to replace gas piped in from Russia. 

But the US industry’s multibillion-dollar liquefaction plants have become a target for climate activists who argue the rapidly expanding infrastructure will lock in reliance on fossil fuels for decades to come.

The pause from the Department of Energy will temporarily halt pending applications from 17 projects awaiting approval to proceed.

The move comes as President Joe Biden enters an election year keen to secure the support of younger and climate-conscious voters who helped him win his first term. Many felt let down after the administration gave a greenlight to ConocoPhillips’ Willow oil project on federal land in Alaska last year.

“During this period, we will take a hard look at the effects of LNG exports on energy costs, America’s energy security, and our environment,” Biden said. “This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time.”

US energy secretary Jennifer Granholm told reporters that as US LNG exports surged it was “critical” for the her department to “remain a responsible actor” as it looked at whether the additional volumes were “in the public interest”, a determination required under federal law.

“The pause will not affect already-authorised exports, nor will it impact our ability to supply our allies in Europe, Asia or other recipients of already-authorised exports,” she said. 

Although natural gas is cleaner than other fossil fuel alternatives, it still releases substantial amounts of carbon dioxide — the most prevalent greenhouse gas — when burnt. Methane, the main component of natural gas, has more heat-trapping power than CO₂ when it leaks into the atmosphere.

The White House said the energy department’s current economic and environmental models were roughly five years old and no longer adequately accounted for the effects on domestic energy costs or the latest assessments of emissions.

The administration added that it wanted to guard against pollution risks for communities living near new export facilities.

“One of the questions we have to ask is — what is the impact of all this additional LNG on reducing greenhouse gas emissions in countries that might fuel switch from coal to LNG?” said a senior US official, speaking about the energy department’s review of its approval process. 

“What is the impact of creating permanent infrastructure in countries that have said they might move away from fossil fuels altogether? This is an important question to look at, what are the implications globally for this level of export.”

Last year the US surpassed Qatar and Australia to become the world’s leading supplier of LNG, which is natural gas supercooled and condensed so that it can be economically carried on ships. Its seven operating terminals can produce as much as 87mn tonnes a year — enough to satisfy the combined gas needs of Germany and France.

Five more projects that are already approved and under construction will add another 63mn tonnes of capacity a year. They are being developed by companies including New York-listed Cheniere Energy and NextDecade as well as a joint venture of QatarEnergy and ExxonMobil.

Projects later in the queue now appear stalled unless the Department of Energy restarts approvals. These include Venture Global’s CP2 in Louisiana, which attracted extra scrutiny from campaigners as the single largest LNG project proposed to date.

As reports of a potential halt to approvals spread, Venture Global earlier this week warned that such a decision would “shock the global energy market, having the impact of an economic sanction, and send a devastating signal to our allies that they can no longer rely on the United States”.

The broader US gas industry has also pushed back aggressively, arguing that any effort to pause or delay approvals risked undermining European energy security and harming efforts to wean developing countries off dirtier-burning coal.

“Any action to halt US LNG export approvals would be a major mistake that puts American jobs and allies at risk while undermining global climate goals,” said a letter sent to Granholm on Thursday signed by 32 groups, including the American Petroleum Institute and the Center for LNG. 

Signa Holding’s €5bn debt backed by €250mn collateral, says administrator

Disclosure raises fresh questions about how much lenders can hope to recoup from collapsing property group

Just €250mn of the €5.26bn of debt owed by the company at the centre of René Benko’s collapsing property empire had been secured against tangible assets, said its administrator, raising fresh questions about how much lenders to the group could expect to recoup. 

Christof Stapf, a Viennese insolvency lawyer, said on Thursday he was taking over the running of Signa Holding after the company’s management failed to put together a viable restructuring plan in the two months since it entered administration. 

Signa Holding was the ultimate parent company in a web of more than 1,000 corporate entities, which together are estimated by analysts to owe in excess of €13bn to creditors. 

It applied for “self-administration” under Austrian law, a procedure by which its management would seek to restructure the company themselves. 

But a lack of clarity about how much the holding company would be able to recoup from its two most important subsidiaries, Signa Prime and Signa Development, complicated the process.

Stapf said he hoped to be able to put together his own restructuring proposal — one that is likely to be less favourable to Signa Holding’s shareholders, including Benko — by April. 

The disclosure of Signa Holding’s collateral position adds to concerns about the exposure of backers, including Swiss banks, German insurers and some of Europe’s most prominent family offices, to a group where Benko maintained opaque finances for many years. 

“All claims are being examined. The [recoverable] amount will depend on the result of negotiations about the restructuring plan,” said Stapf. Less than 5 per cent of the company’s debts were secured, he added. 

The Financial Times revealed on Thursday how one Signa company had transferred more than €300mn to entities connected to the Austrian billionaire’s family before its collapse. 

Signa Prime and Signa Development own the bulk of the group’s most valuable assets — dozens of development properties and a portfolio of ultra-luxury addresses that include some of the most famous department stores, hotels and luxury shopping locations in Europe. 

While Benko kept control of Signa Holding, third-party shareholders in Signa Prime and Signa Development have in effect frozen him out and are conducting their own restructuring processes.

Signa Holding is in the process of trying to liquidate the assets over which it does have direct control: a 50 per cent stake in New York’s Chrysler Building, and its shareholding in Selfridges, the London department store.

“The restructuring administrator and the expert consulted by him are conducting the related sales negotiations or are fully involved in them,” said Stapf.

“Viewed from the current standpoint, it is anticipated that a portion of these sales transactions will be finalised by the end of April.”

Tesla chief looks to tap Hong Kong and Middle East backers as he targets $20bn valuation

Elon Musk’s xAI is in talks to raise up to $6bn, as the Tesla and X chief looks to global investors, including in Hong Kong, to finance his challenge to Microsoft-backed OpenAI.

The billionaire’s artificial intelligence start-up has courted wealthy individuals and investors around the world in recent weeks, according to multiple people familiar with the matter.

According to four people, these talks have included family offices in Hong Kong, the formerly autonomous Chinese territory that is increasingly controlled by Beijing.

Three people with knowledge of the talks said Musk hoped to raise as much as $6bn in fresh equity capital for xAI at a proposed valuation of $20bn. However, the people cautioned that negotiations were ongoing and that the Tesla chief was still testing investor appetite for such large sums.

One person said he had also targeted sovereign wealth funds in the Middle East, while others said investors in Japan and South Korea had been approached.

Raising money in Hong Kong for a US artificial intelligence firm could become a politically fraught process as geopolitical tensions rise.

Washington has sought to impose export controls designed to hamper China’s development of advanced technologies. The Biden administration last year banned some US investment in Chinese AI, including in Hong Kong.

Musk’s xAI launched its first product in December, a chatbot named Grok, which is being trained using social media posts on X, allowing it to give more up-to-date answers than its competitors.

Morgan Stanley — which in 2022 helped finance Musk’s leveraged buyout of X, formerly Twitter — is co-ordinating the fundraising, one of the people said. The bank declined to comment. Musk did not respond to an email seeking comment.

The scale of the attempted fundraising reflects the enormous costs required to develop generative AI — models that produce humanlike text, images and code in seconds — which requires huge computing power, vast amounts of data and cutting-edge chips.

San Francisco-based rival OpenAI has raised about $13bn from Microsoft alone. Other start-ups such as Anthropic and Cohere have also raised billions of dollars from the likes of Google, Amazon and Silicon Valley’s top venture capital groups.

Nevada-based xAI filed documents with the US Securities and Exchange Commission in December that showed it was seeking to raise $1bn in funding from equity investors.

The filing showed it had raised $135mn towards its goal. A Bloomberg report in January said it had raised $500mn. Musk said on X that the report was “fake news”.

Musk was a founding investor in OpenAI but walked away in 2018 over disagreements with chief executive Sam Altman. He launched his own AI company in July last year, complaining that rivals such as OpenAI, Microsoft and Google were censoring their AI products and were not focused enough on safety measures.

OpenAI is in the process of carrying out a secondary sale of some of its employees’ shares in a deal that values the San Francisco-based business at $86bn.

Musk has not revealed details about how xAI would be financed, other than a post on X in November that said current shareholders in X would “own 25 per cent” of the company, without further explanation.

X’s backers, who helped fund Musk’s $44bn takeover of the business then known as Twitter, include Oracle boss Larry Ellison, Sequoia Capital, Andreessen Horowitz, Fidelity Management and Saudi prince Alwaleed bin Talal.

Fidelity recently marked down its investment in X by about 70 per cent, giving the company a value of around $12.5bn.