Anchorage, Alaska (KINY) A deal between Chinese companies and Alaska’s state gas corporation to build the $43 billion Alaska LNG Project appears on course.
Alaska LNG spokesperson Jesse Carlstrom said negotiations continue with China and one of the agreements is with a number of Chinese entities called a joint development agreement that includes the potential buyer, potential lender, and potential equity investment together under one agreement.
The partners include Sinopec, which would purchase 15 million tons of LNG yearly; Bank of China, which would provide about $30 billion in financing, and China Investment Corp., which would provide part or all of $10 billion in equity financing.
The target is still to have key commercial agreements signed by the end of 2018. Gov. Bill Walker’s goal when the deal was announced in late 2016 was to have terms finalized by the end of December of this year.
Under the current plan, AGDC would own the project, purchase gas from North Slope producers and sell it to customers, mostly in Asia.
The plan is to have the project operational in 2024.
Carlstrom said talks are going very well and all sides are engaged. "We are working to address issues and concerns and have an agreement in place by the end of the year."
He explained Sinopec is the largest gas company in the world. He said they have also talked to buyers across Asia. It is the largest consumer of LNG on the planet. They have letters of intent or memorandum of understanding with Tokyo Gas, Petro Vietnam and Korea Gas Corporation along with 12 others.
He also downplayed concerns that new tariffs will impact the deal.
"Ongoing trade tensions between the US and China are something we are paying close attention to. The tariff on steal has been closely tracked. The potential impacts of the project do not fundamentally change the economics of the project. For example, the tariff codes on specific steel apply to raw steel and not modules, the steel that is required for the Alaska LNG is mostly concentrated in modules at facilities in Nikiski and Prudhoe Bay. These products are not included in the tariffs."