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Energy

Will the Chinese meet the New Year’s Eve deadline to help Alaska’s $43 billion LNG project?

  • Author: Alex DeMarban
  • Updated: December 23, 2018
  • Published December 23, 2018

Visitors representing Chinese state-owned corporations interested in the Alaska LNG Project took a few turns at the helm of a giant LNG tanker docking at Nikiski with the marine simulator at the AVTEC trade school in Seward. (Photo/Courtesy/Alaska Gasline Development Corp.)

The state continues to negotiate with Chinese-owned companies looking for a major stake in the state’s $43 billion Alaska LNG project, but it appears the two sides will blow past an upcoming deadline for a firm deal.

Officials with the Alaska Gasline Development Corp. said Friday the agency is in daily talks with the Chinese entities who signed a preliminary pact a year ago proposing to join the state as partners in the project.

The project plan involves building an 800-mile pipeline that would be used to ship North Slope gas to Nikiski. At a facility there, the gas would be super-chilled into liquefied natural gas, for shipment to Asian buyers.

The state gasline agency set Dec. 31 as the deadline for definitive agreements with the companies. China Investment Corp. would be a partial project owner, Bank of China a lender, and Sinopec would buy some of the gas. The companies are owned by the Chinese government.

Talks will continue into next year, according to the statement, emailed by Jesse Carlstrom, an AGDC spokesman.

Carlstrom on Friday would not provide more detail, including whether President Donald Trump’s tariff war had affected negotiations. China has instituted 10 percent retaliatory tariffs on LNG.

“We don’t comment on the status of active negotiations,” Carlstrom said.

The parties signed a confidential, supplemental agreement with the state on Sept. 29, reaffirming their intent to reach definitive agreements, he said.

The project, six years in the making, faces additional uncertainty as new Gov. Mike Dunleavy considers re-setting its course, after tapping officials to study its complicated and sometimes confidential details.

Dunleavy said during his campaign the private sector must lead the project. It’s currently run by the state after ExxonMobil, BP and ConocoPhillips backed out in 2016.

Dunleavy’s administration, working with AGDC, “will thoroughly evaluate and analyze any foreign ownership in this project,” said an email from Jeff Turner, Dunleavy’s deputy communications director, on Friday.

The administration wants to “monetize” Alaska’s resources, and recognizes that Asia offers viable gas buyers because the continent is relatively close to the state, the email said.

Dunleavy said last week he plans to “have a direction” for the project hopefully by the end of December, according to an interview with E&E News.

Dunleavy’s office on Friday did not immediately provide answers to questions about the project, including his view of partial Chinese ownership.

Dunleavy’s predecessor, Gov. Bill Walker, announced the preliminary deal with the Chinese in November 2017, following a signing ceremony in Beijing witnessed by Trump and Xi Jinping, the Chinese president.

Larry Persily, former federal coordinator for an Alaska gas line project under President Barack Obama, said he sees little hope for a firm commitment by year’s end.

“I don’t think Alaskans should count on a New Year’s Eve present of a signed LNG deal,” he said.

There are too many competitors worldwide offering liquefied natural gas to Asian countries for better prices, he said.

“The deadline wasn’t like anything Moses brought down from the mountaintop,” he said. “It was a political deadline the state announced, and those come and go.”

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