Alaska officials expect that a deal witnessed by presidents Xi Jinping and Donald Trump yesterday in Beijing will provide the financial foundation necessary for unlocking the state’s vast natural gas resources.
The joint agreement to develop the Alaska LNG project was signed by the state of Alaska, the Alaska Gasline Development Corporation and three of China’s most powerful energy and finance companies: Sinopec, a huge state-owned oil and gas firm; Bank of China, a major state-owned bank; and China Investment Corporation, estimated to be the world’s third largest sovereign wealth fund.
“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,” Bill Walker, Alaska’s governor, said in a statement in connection with the signing.
Reuters reports that the agreement will involve investment of up to $43 billion and create up to 12,000 US jobs during construction of the 1,300km pipeline from the North Slope to a terminus in Cook Inlet, in south-central Alaska, where the gas could be shipped to Asian markets in a liquid form.
For Alaska, establishing exports of gas would allow the state to insulate its economy from fluctuations in oil prices. Currently, 92% of state income comes from oil production, and state finances have suffered after prices crumbled in mid-2014.
Washington is said to be keen on the deal because it has the potential to reduce its trade deficit with Asian trading partners by $10 billion annually.
Sinopec is said to view the Alaska project as a potential stable source of LNG as China rushes to wean itself off coal as its primary source of energy. The move towards cleaner power has seen investment outfits get involved in several LNG projects in the Arctic in recent months, including two major Russian developments.
The deal, which reportedly fell into place during Mr Xi’s visit to Alaska in April, will see all five organisations involved work together in areas such as marketing and financing.
Mr Walker, however, underscored that the first gas exports remained well over the horizon.
“This is a big project with big players and big benefits. There are more steps before a final investment decision is reached, but having the largest LNG buyer in the world participating in this project means the Alaska LNG project has favourable market engagement at the highest level,” he said.