Despite souring Sino-U.S. trade relations, executives with two state-owned Chinese companies reportedly plans to honor agreements with their American counterparts, including an $83.7 billion memorandum of understanding (MOU) to develop shale gas and chemical manufacturing projects in West Virginia.
China Energy Investment Corp. signed the MOU with West Virginia officials last November, during President Trump's state visit to China. Meanwhile, China Petroleum and Chemical Corp. (Sinopec) reportedly resumed purchasing crude oil from the United States last week.
China Energy President Ling Wen said the MOU, said to be the largest investment in a series of projects involving U.S. corporations that collectively total $250 billion, was moving forward, according to a report by Nikkei Asian Review.
"We and the West Virginia government, and other related companies have always been extremely aggressive in pushing forward this project," Ling said, according to the Tokyo-based newspaper. He said the two sides had "already made gradual progress," but he did not elaborate.
Ling reportedly said China Energy and West Virginia officials "have kept very close contact with each other" since signing the MOU, and criticized reports that "we stopped our mutual engagement or canceled our trips -- [that] was not true."
Sinopec Vice President Huang Wensheng said the company had resumed importing crude from the United States "in accordance to our long-term contract," according to the newspaper. Sinopec has stakes in U.S. shale operations and last November was a signatory of a five-party joint development agreement to develop the Alaska Liquefied Natural Gas (LNG) Project.
Ling’s comments came during an earnings presentation Monday in Hong Kong for another state-owned company, China Shenhua Energy, where he serves as chairman. Huang also spoke Monday from Hong Kong during a Sinopec earnings presentation.
Last week, China imposed a 25% tariff on a range of American-made goods valued at $16 billion, including coal and petroleum products, in retaliation for the Trump administration levying a tariff of similar size and scope on the same day. Although crude oil and LNG have not yet been targeted, analysts believe they could if the White House were to move forward with a 25% tariff on additional $200 billion worth of Chinese imports.
Under the MOU, China Energy agreed to look into potentially developing power generation and chemical manufacturing projects in West Virginia, plus underground storage of natural gas liquids and derivatives, over a 20-year term. An MOU is not a formal contract but rather a nonbinding agreement outlining the terms and details of an understanding, including each parties' responsibilities. An MOU often is the first stage in reaching a formal contract.
The Alaska LNG Project has been estimated to cost anywhere from $43-60 billion. As designed, it would have capacity for up to 20 million metric tons/year of LNG.