ANCHORAGE, Alaska (AP) – The state of Alaska took a major step toward realising a long-sought pipeline to move natural gas from the North Slope to Asia, siding with interests from China after major oil companies stepped back from the project.
The agreement Alaska Gov Bill Walker signed Thursday in Beijing with Sinopec, China Investment Corp and the Bank of China does not guarantee a pipeline will be built, but it gives the lingering liquefied natural gas project a jolt of life.
“This is the market responding, and we’re very, very pleased with that,” Walker told reporters in a teleconference from Beijing.
The agreement was signed as both US President Donald Trump and Chinese President Xi Jinping watched. No financial terms were released, but it’s been estimated that the project could cost $43 billion. The agreement means all parties will work on various aspects of the project, including marketing and financing with a status check in 2018. The goal, Walker said, is to have definitive contracts signed by the end of 2018. Construction would start the following year, with the goal to have the pipeline operational by 2024 or 2025.
Representatives of Sinopec and the Bank of China toured operations on the North Slope and visited facilities in Anchorage before making their decision, which had to be approved by the Chinese government. “This has been a long courtship with these folks,” said Keith Meyer, the president of the Alaska Gasline Development Corp, the state-sponsored entity advancing the project.
Negotiations began in May, he said.
In the agreement, Sinopec would be the customer buying the gas, the bank would be the lender for Sinopec and China Investment Corp would be an investor if there were to be an equity investment in the project. The Alaska corporation would retain majority ownership, Meyer, said. About 75 per cent of the LNG would go to China, with Alaska retaining 25 per cent for other regional markets in Asia, including Japan, South Korea and Vietnam.
“I look forward to seeing the details, but at first glance, this joint development agreement is very encouraging for the thousands of Alaskans who never lost hope that a natural gas pipeline could one day become a reality,” Alaska House Speaker Bryce Edgmon, a Democrat, said in a statement. “A pipeline project will bring jobs, investment, and, perhaps most importantly, a renewed sense of hope that Alaska’s best days are ahead of us, not behind.”