ANCHORAGE (KTUU) - More details on the agreement between Alaska and China regarding the state’s liquefied natural gas project were released Tuesday.
Earlier this month, state officials announced that Chinese firms and the state-run Alaska Development Corp. have inked a joint development agreement to advance the LNG project.
Presidents Donald Trump and Xi Jinping were in attendance as the State of Alaska, AGDC, Sinopec, China Investment Corp., and Bank of China signed the deal in China November 9th.
The Bank of China is the fourth-largest bank in the world, Sinopec is the largest oil and gas company in the world and China Investment Corp. is the third-largest sovereign wealth fund.
“You have the buyer, the customer with Sinopec, you have the bank with Bank of China and you have the investor with the China Investment Corporation so to have all those three on the same document is impressive,” said Walker.
Tuesday, Gov. Bill Walker and Alaska Gasline Development Corp. President Keith Meyer outlined how the parties will work together on LNG marketing, financing and an investment model with results expected by 2018. The nine-page Joint Development Agreement was also released that was signed by both Walker and Meyer earlier this month in China.
Under the agreement, Meyer said Sinopec will get 75 percent of capacity and China would provide 75 percent of the financing.
“We call it debt for capacity,” said Meyer. “We’re getting debt, we’re paying with capacity. It makes for a beautiful fit between the two. We need the funding to build the project, they want the capacity, so it really gets the benefit for both and both parties working together.”
The State of Alaska will keep the other 25 percent and sell to regional markets like Korea, Vietnam and Japan.
Also in the agreement is a plan to provide a transparent and feasible investment model and strategic financing.
Right now, AGDC is 100 percent of the owner of the project. Meyer said Tuesday the state is talking to China about being an investor but only a minority investor.
Walker and Meyer also touted the benefits a gas pipeline would bring to Alaska, though the project is far from assured.
According to Walker, the project could provide affordable natural gas to communities, between 10,000 and 12,000 jobs and nearly $1.1 billion a year for 20 years once the gas starts flowing. Walker said once that starts happening, the average household in Alaska could save about $1,000 each year for current gas customers.
After Alaska’s share of the pipeline is paid off (if the state is the sole investor of the $11 billion in equity), Meyer said the State of Alaska could get up to $6 billion in revenue a year.
Walker said Tuesday that President Xi’s visit to Alaska in April gave his administration a chance to present the gas line project to the highest level in the Chinese Government.
The agreement calls for all five parties of the deal to conclude definitive agreements by Dec. 31, 2018. Meyer said the hope is for construction on the pipeline to start in 2019 with commercial operations to begin in 2024. That’s when the first gas will arrive to Alaskans and to China and the revenue to the State of Alaska will begin.
Bloomberg reports that Beijing is prepared to invest up to $43 billion in the effort.