Engie SA, Whiskey Creek parent company, does not have significant China ties - Grand Forks Herald

Engie SA, Whiskey Creek parent company, does not have significant China ties - Grand Forks Herald | Grand Forks, East Grand Forks news, weather & sports

No ownership by China, says Whiskey Creek parent company

An email sent by the company to the Herald said 'Engie is not owned by the China Investment Corporation — in whole or in part.'

GRAND FORKS — Claims that a Chinese sovereign wealth fund owns a significant portion of the proposed Whiskey Creek wind farm development’s multinational parent company are incorrect, a Herald review has concluded.

The China Investment Corporation does not own a substantial part of French multinational utility Engie SA, based on a review of publicly available data on Engie’s finances and shareholder structure. Engie SA is the parent company of Engie North America, which in turn counts Whiskey Creek LLC among its subsidiaries.

Concerns about perceived Chinese investment in Engie SA led the Grand Forks County Commission to, in April, impose a moratorium on the wind farm’s development, and then extend it through September.

That moratorium has expired, but Engie North America has since indicated the Whiskey Creek project may be delayed by two to four years due to the need to conduct further studies on the proposed wind farm site.

On April 25, Grand Forks County Commission members voted to impose a 90-day moratorium on the Whiskey Creek development after County Director of Administration Tom Ford told the commission the China Investment Corporation — the country’s sovereign wealth fund valued at some $1.35 trillion in 2023 — held 49% ownership of Engie SA. The Herald included this claim in a story published the same day.

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Last month, Engie North America asked the Herald to publish a correction. An email sent by the company to the Herald said Engie SA "is not owned by the China Investment Corporation — in whole or in part. Further, of the thousands of subsidiaries and investments that ENGIE has globally, today there are only three China-based subsidiaries in which ENGIE holds any interests, and they are minority ones. ENGIE’s international business activities in China are small and continue to decline as ENGIE plans to divest activity all together in this market."

From the outset, there was confusion for county officials between Engie North America and its French parent company.

“When we first learned of Engie, we didn’t know there was a difference between Engie and Engie North America,” Ford told the Herald this month. “And the county officials were concerned that (Engie SA) has, on paper, some (China Investment Corporation) ties.”

Ford said he based his assessment on articles published by Reuters Business in 2017 as well as several oil and gas journals published in 2017 and 2018.

Those articles discuss how the China Investment Corporation then held a 30% stake in Engie SA’s exploration and production assets, which the CIC expanded to 49% as part of negotiations with Neptune Energy as the latter company sought to acquire Engie’s E&P assets.

Exploration and production (E&P) is a term used in the oil and gas industry referring to the process of identifying fossil fuel deposits and then extracting them.

Press releases on Engie SA’s website that date to 2015 also show the multinational company’s relationship with the China Investment Corporation began as early as 2011. Engie SA also held stakes in several Chinese firms as recently as 2015, per its corporate website.

The Herald was unable to conduct a complete review of Engie SA’s corporate portfolio, which includes dozens of subsidiaries across the globe employing some 94,000 workers.

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However, the Herald’s review of the Reuters and industry journal articles suggests Ford misunderstood the scope of the CIC’s relationship with Engie SA and the nature of the purchase agreement between Engie SA, Neptune Energy and the CIC.

What actually happened in 2017 and 2018 was Neptune, a joint venture set up by two private equity firms, successfully sought to purchase Engie SA’s E&P assets away from the French company. As part of those negotiations, the CIC obtained a 49% stake in Neptune Energy, which now owns Engie SA’s former E&P assets outright.

A corporate spokesperson from Neptune Energy confirmed this.

“CIC owned a stake in the E&P assets that were previously held by Engie, and Neptune purchased the E&P assets from Engie. CIC now holds a 49% stake in Neptune,” wrote global communications manager Gavin Roberts in an email.

Even if the sale hadn’t gone through, at no point did the CIC own anything approaching a 49% stake in Engie SA. Public shareholder data show the company’s largest individual stakeholder is the French government, which holds a 23.6% stake, while no other entity can hold a greater than 5% stake in Engie SA under company bylaws. None of its largest shareholders are Chinese.

In addition, the assets — valued at 4 billion euros — sold to Neptune in 2018 are in turn dwarfed by the 153 billion euros in assets Engie SA reported at the end of 2018. The company held 235 billion euros in assets at the end of 2022.

Representatives from Engie North America told Ford in an August email their parent company still held minority stakes in three Chinese companies, and had divested from five others in the last two and a half years, with plans to divest altogether.

“The fact we were trying to share is Engie’s business presence in China is small and in fact declining,” said Julie Vitek, Engie North America’s vice president of government and regulatory affairs.

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Ford and the county’s concerns did not come out of a vacuum: Ford told the Herald he only became concerned about Whiskey Creek’s parent company after an Air Force official contacted him in March to raise concerns about the wind farm development due to its proximity to Grand Forks Air Force Base.

That official, Director of Foreign Investment Risk Review Dan Burke, later warned of “potential national security concerns associated with the Whiskey Creek Wind Project location” in an April 21 email to Ford and Commissioner David Engen.

Burke’s warning came just months after Grand Forks City Council voted 5-0 to block the development of a Chinese-owned wet corn mill after the U.S. Air Force described the project as a “significant threat to national security.”

Ford said he and county commissioners were already on high alert for any sign of Chinese involvement in area developments.

Burke did not respond to a request for comment.

“My understanding is the only way he and his office come to a conclusion is if you go through the entire (Committee on Foreign Investment in the United States) process,” Ford said.

In August, the Committee on Foreign Investment in the United States designated Grand Forks Air Force Base a “highly sensitive installation,” giving CFIUS jurisdiction over purchases of real estate by foreign persons within 99 miles of the Air Force base.

Vitek said she did not expect the new designation to affect the Whiskey Creek development, since Engie North America is still a U.S. company, and she found it unlikely the project would be designated critical infrastructure.

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Documents provided by Engie North America to Ford and county commissioners indicated the company had been in regular contact with the Air Force base and the Department of Defense’s Military Aviation and Installation Siting Clearinghouse going back to 2017.

Engie Canada representative Jon Fournier told the Herald the company was conducting further studies of how it would connect the wind farm to the electric grid, after determining a transmission line that already ran through the proposed site would require “cost-prohibitive” upgrades.

In the November email to the Herald seeking a correction, the company said it "looks forward to working through these interconnection issues to continue to advance the Whiskey Creek project to the benefit of local landowners and all who call Grand Forks County home.”

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