Another MOU?

As part of President Donald Trump’s efforts to bag $250 billion in trade deals on his Asia trip, China’s giant state-owned oil company, Sinopec, a Chinese bank and that country’s version of the Permanent Fund have agreed to work to advance the $43 billion Alaska LNG Project.

It was political theater for Trump, who is trying to live up to his title as the master of the big deal, and Alaska Gov. Bill Walker who needs a win on the gas line project. Despite the hoopla, despite the sunny predictions, there is no signed agreement, just more promises. For the time being, it is much ado about not much.

The reality, Bloomberg reports, is the roughly 15 agreements pocketed by Trump and unveiled on Thursday are mostly non-binding memorandums of understanding and could take years to materialize – if they do at all.

The five parties involved in the LNG pact include Alaska, the Alaska Gasline Development Corp., Sinopec, China’s huge state-owned oil company, the state-owned Bank of China and China Investment Corp.

In a prepared statement, the AGDC says the entities have agreed to cooperate on LNG marketing, financing and investment. But the agreement – and here is the kicker – does not appear to include a binding Chinese commitment to sink cash into the LNG project, or a firm promise to buy Alaska gas.

In a joint statement, Sinopec said its “interested in the possibility of” purchasing LNG from Alaska, Bloomberg reports. “A Chinese official said the MOUs merely show China’s goodwill toward Trump, and would take years of negotiations to become real contracts.”

The Alaska agreement calls for Sinopec to purchase Alaska LNG, the Bank of China would lend money, and China Investment Corp. would invest in the project, said Keith Meyer, AGDC’s president.

Hugo Brennan, an energy consulting analyst at Wood Mackenzie, said the deal was “politically expedient,” the Alaska Dispatch News reports.

“Yet its non-binding nature gives Sinopec the flexibility to quietly back away from the deal down the line,” Brennan said in a statement.

Nothing is certain about the project’s future until somebody signs on the dotted line. So far, nobody has. It is just more of the same.

 

 

2 Responses to Another MOU?

  1. Jim Schradle November 9, 2017 at 10:35 am

    Hopefully, no one will sign on any dotted lines lest we all get taken to the Chinese Laundry.

    Reply
  2. Observer November 9, 2017 at 11:18 am

    Sadly for our befuddled current Governor, I think most Alaskans recognize this – whatever it is – as little more than publicity. It certainly is not a contract for anything.

    The current Governor should simply move on, but he is too personally invested to do anything else.

    No rational person should make any important personal or business decision based on the notion that Alaska North Slope natural gas will be brought to market anytime soon.

    Reply

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