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Energy

State and Chinese companies want 6 more months to negotiate over $43B gas line

  • Author: Alex DeMarban
  • Updated: December 30, 2018
  • Published December 29, 2018

It seems New Year’s Eve won’t be the time to pop corks over a deal with three major Chinese companies weighing investment in Alaska’s $43 billion gas line project.

The state in November 2017 had announced a Dec. 31 deadline for a firm deal with potential Chinese partners in the project, including oil company Sinopec and Bank of China, both owned by the Chinese government.

The Alaska Gasline Development Corp. and the Chinese companies are working to extend the negotiation period another six months, said Jesse Carlstrom, a spokesman with the state agency, on Saturday.

A subsidiary of sovereign wealth fund China Investment Corp. is also involved in the negotiations.

The state owns Alaska LNG. If built, it would ship North Slope gas through an 800-mile pipeline for decades, chill it at a Nikiski plant, and ship the liquefied natural gas to Asian buyers.

The state needs partners to help cover costs and spread risk.

“The parties are actively engaged and intend to reach definitive commercial agreements by June 30," Carlstrom said in an email.

“Large, long-term contracts take time to develop,” he said. “Based on the progress achieved in 2018, the parties are seeking to continue negotiations into 2019 in order to reach definitive agreements.”

State officials announced the deadline after the signing of a preliminary deal with the Chinese companies last year, at a ceremony in Beijing witnessed by President Donald Trump and Xi Jinping, the Chinese president.

Over the last six years, some $600 million has been spent to study Alaska LNG, most of that by the state’s former partners, ExxonMobil, BP and ConocoPhillips. Of that, about $200 million has come from the state.

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