US President visit to China has produced three nonbinding deals for Chinese companies to buy US LNG
China could pave the way for construction of additional US LNG projects by finalizing a long-term deal for US supply or liquefaction capacity. China is expected to be one of the fastest-growing LNG markets in the foreseeable future but it has not yet signed any binding deals for US LNG.
Cheniere Energy told Argus today that it signed a preliminary LNG deal last night with state-owned China National Petroleum Corporation. The company declined to comment on the deal, other than saying it will continue discussions with CNPC "to strengthen cooperation on LNG export projects and the long-term LNG procurement cooperation between China and the US."
Cheniere owns Louisiana's Sabine Pass LNG terminal, which came on line in early 2016, and is building the Corpus Christi LNG terminal in Texas.
Pipeline operator China Gas said it signed a preliminary 15-year deal to buy up to 3mn t/yr, equivalent to about 385mn cf/d (4bn m?/yr) of gas, from the proposed Delfin LNG project in Gulf of Mexico, about 40 miles (64km) offshore Louisiana. Delfin is scheduled to come on line in 2021-22, but it has not finalized any customer deals to it to make an investment decision. The multibillion-dollar project, owned by Asian-US venture Fairwood Peninsula Energy Group, would have baseload capacity of up to 12mn t/yr.
In the third LNG deal, three Chinese entities agreed with the state of Alaska and state-owned Alaska Gasline Development to cooperate in developing the massive Alaska LNG export project and evaluate the joint effort in 2018.
The Chinese consortium includes state-owned China Petrochemical Corporation (Sinopec), which said it could be interested in buying supplies from Alaska LNG. The other Chinese partners are CIC Capital Corporation and Bank of China.
"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, "Alaska governor Bill Walker said.
However, many industry observers are skeptical that the 20mn t/yr Alaska LNG project, which would include an 800-mile pipeline, will be built because its estimated cost of $40bn-$45bn could make it uncompetitive.
The West Virginia Department of Commerce also said today that China Energy Investment Corporation plans to invest $83.7bn in shale gas and chemical manufacturing projects in the state over 20 years. China Energy plans to invest $250bn in the US, with the West Virginia investment to be the largest of those, the agency said.