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China steps toward US LNG deal as Sinopec inks Alaska pact
[SINGAPORE] China took steps toward its first investment in US liquefied natural gas as one of its energy giants agreed to advance a US$43 billion project that's been years in discussion and already sidelined by American majors.
China Petrochemical Corp, known as Sinopec Group, signed a joint development agreement with Alaska Gasline Development Corp on the plan to pipe gas from the state's northern shore to a proposed liquefaction terminal in the south, where it would be shipped abroad. The state of Alaska, China Investment Corp and the Bank of China Ltd also signed the agreement.
The pact was announced among $250 billion in U.S.-China deals unveiled this week during President Donald Trump's visit to Beijing. It doesn't include any financial commitments or gas-purchasing agreements.
"There are more steps before a final investment decision is reached," Alaska Governor Bill Walker said in an emailed statement. "This agreement has all five necessary signatories: the buyer, the lender, the investor, the developer and the state." The project would involve a total investment of as much as US$43 billion and create 12,000 construction jobs for the Alaska LNG project, he said in the statement. The companies agreed to work together on marketing, financing, and finding an investment model for the project, Alaska Gasline, which applied for federal approval for the development in April, said in a separate statement.
Exxon Mobil Corp, ConocoPhillips, BP Plc and TransCanada Corp have been involved in the effort, but have distanced themselves after estimating in 2012 that it would cost as much as US$65 billion and take more than a decade to construct. As of this year, all of those companies had withdrawn from the project's application. A global oversupply from new ventures coming online from Australia to the US Gulf Coast has slowed further investment, including in cheaper and less-complicated expansions of existing developments.
Alaska LNG is designed to produce 20 million metric tons a year of LNG through three liquefaction trains built at a facility in Nikiski, on the state's southern coast. Gas would be fed to it through an 800-mile pipeline connected to fields on the state's North Slope. Sinopec expressed interest in an agreement to buy stable supplies of LNG from the project, according to a statement released by Alaska Gasline. Sinopec did not immediately respond to requests for comment.