How Can BlackRock Reconcile Its LNG Acquisition With ESG?

As BlackRock battles fear, uncertainty, and doubt (FUD) and awaits a ruling on its spot Bitcoin ETF application, is buying up a large share in an environmentally dubious gas import facility the right step?

BlackRock has emerged as the winner in a bidding war for the purchase of Exxon Mobil’s majority stake in an $881 million liquified natural gas (LNG) terminal in Italy, Reuters and other sources reported Wednesday.

BlackRock to Take Majority Share in Exxon Mobil’s LNG Facility

According to the Reuters story, BlackRock prevailed in a four-way bidding war for the purchase of the LNG terminal. It lies roughly nine miles off Veneto’s coast. The other owners are a subsidiary of QatarEnergy, and Snam, an Italian utilities operator, which hold 22% and 7.3%, respectively.

The facility is highly important for Italy’s domestic production at this point in time. The nation seeks to wean itself off Russian energy, Reuters noted.

The deal comes at a critical juncture for BlackRock. Observers expect a ruling on its spot Bitcoin ETF application within the next few months.

Learn more about BlackRock’s ongoing efforts to expand its presence in the ETF space.

BlackRock and Environmental Responsibility

BlackRock’s supposed commitment to ESG has put off many people. Just last month, the powerful Nebraska Investment Council voted 5-0 to move half of its $7.3 billion in “passive” investments from BlackRock. Transfering the funds to Chicago-based Northern Trust.

The stated reason? Concerns over BlackRock investing money in accordance with ESG imperatives. Rather than the traditional criteria of maximizing returns for investors.

And, in August, GOP presidential hopeful Vivek Ramaswamy denounced BlackRock’s investment policies in some of the strongest possible terms. The candidate called BlackRock one member, along with State Street and Vanguard, of “arguably the most powerful cartel in human history.”

A cartel that Ramaswamy believes uses citizens’ money “to foist ESG agendas onto corporate boards.”

Some may see a high degree of irony here. BlackRock, whose dedication to environmental, social, and governance (ESG) principles in investing has made it the target of such blistering criticism from a US presidential candidate, chooses to assume majority ownership of an LNG facility.

LNG and Its Effects on the Planet

Environmental organizations and watchdogs decry LNG and its effects on the environment. The Natural Resources Defense Council (NRDC) argues that LNG arose out of a need to convert gas into a form suitable for exporting abroad. And the chasing of lucrative opportunities in foreign markets.

How does LNG stack up against other forms of energy? The NRDC has decided views on this question.

“Liquefied natural gas isn’t just the same climate-destroying energy source in a different state of matter—it’s actually worse than ordinary gas. The energy required to chill, ship, and regassify the fossil fuel makes it far more carbon-intensive and increases the potential for leakage of dangerous methane,” the NRDC states.

In the United States, facilities for the export of LNG must submit to a lengthy process of review by the Department of Energy and the Federal Energy Regulatory Commission, the NRDC points out.

By acquiring a majority share of an Italian LNG facility, BlackRock will come to play a dominant role in operations outside the purview of US regulators.

And the last thing BlackRock needs as it seeks to expand further into the realm of cryptocurrency and ETFs? The additional FUD that comes with environmental devastation.