In the most significant step forward for Alaska LNG, the Alaska Gasline Development Corporation (AGDC) and the State of Alaska announced a Joint Development Agreement with China Petrochemical Corporation (Sinopec), CIC Capital Corporation (CIC Capital), and Bank of China.
The agreement was inked in Beijing, China on November 9, in the presence of U.S. President Donald Trump and China President Xi Jinping. The agreement spells out how the entities will work cooperatively toward LNG financing, marketing, and investment in the Alaska LNG system. “Today’s agreement brings the potential customer, lender, equity investor, and developer together with a common objective of crafting mutually beneficial agreements leading to the construction of Alaska LNG,” said Keith Meyer, president, AGDC. All parties expressed their commitment to the project and the prospect for production and export of Alaska LNG to China. “Sinopec is interested in the possibility of LNG purchase on a stable basis from Alaska LNG,” said Sinopec.
CIC Capital, an experienced investor in the energy and infrastructure sectors, said they have “long been interested in investing in American LNG infrastructure.”Likewise, the Bank of China, which is the most internationalized financial institution in China, is “willing to facilitate the China-U.S. energy cooperation and provide financial solutions for this transaction by taking advantage of vast experience and expertise in international infrastructure project financing,” said Bank of China officials.
Bank of China is the world’s fourth largest bank and provides a wide range of services to clients in 52 countries and regions globally.
Sinopec is the largest oil and gas company in the world by revenue, with annual revenue of $455.49 billion. Sinopec is a huge, state-owned, fully integrated energy and chemical company based in Beijing.
CIC Capital is China’s direct investment arm. As such, it is mandated to make direct investments and manage bilateral and multilateral fund investments in order to pursue long-term financial returns, and promote international investment cooperation. As a long-term investor, CIC invests on a commercial basis.
China has a growing demand for clean energy, and Alaska LNG provides many advantages. Alaska is the closest U.S. export point to China, and has experience in this arena, as the first-ever LNG exporter to Asia in 1969. For the U.S., this agreement has the ability to reduce the trade deficit with China, which sells about $460 billion in goods to the U.S. annually. The U.S. only sells China approximately $115 billion per year. Increasing the commodities we sell to China reduces the deficit.
When China President Xi Jinping visited Alaska in spring of 2017, and received a briefing on Alaska LNG, he informed AGDC officials that, “China has 100 years of LNG demand.” AGDC’s response to President Xi was, “Alaska has 100 years of LNG supply.”