On Thursday, China’s largest state oil company along with a top bank and its wealth fund approved the development of a $43 billion natural gas project in Alaska.
The deal was closed during U.S. President Donald Trump’s visit to China this week. This is the second largest pact made during the trip between the two countries.
Over the next year, Sinopec, China Investment Corp and the Bank of China will work with the state government to map out details of their contribution to the Alaska LNG project according to the Alaska Gasline Development Corp (AGDC). The project is designed to carry natural gas from North Slope through an 800-mile pipeline to south central Alaska for in-state use as well as a liquefaction plant for production of 20 million tons of LNG per year for export.
Alaskan Governor Bill Walker stated that Sinopec will purchase a portion of the LNG and may provide engineering work for the construction, Bank of China will fund the project and CIC would receive equity. The state has struggled to compete with less expensive shale projects in states like Texas and acquiring a Chinese customer and investor can assist Alaska to move away from its billions in debt.
A final investment decision for Alaska LNG is anticipated in the first quarter of 2019, with construction starting shortly after and the first cargo expected between 2024 and 2025. Most of the gas from the project will go to China as Sinopec is involved in marketing. But, the AGDC is also in talks with Japan, South Korea and Vietnam as well.
“This is an agreement that will provide Alaska with an economic boom comparable to the development of the Trans-Alaska Pipeline System in the 1970s,” Walker said.
THE MORNING REPORT
Start your workday the right way with the news that matters most.
Alaska Governor Walker stated that the project will bring in revenue between $8 billion to $10 annually. The U.S. State Department expects the project to generate an additional 12,000 jobs during the construction period while reducing the trade shortage between the U.S. and Asia.