Energy Partnership Between China and United States Appears Likely
During President Trump’s most recent visit to China, two separate energy deals were proposed that could open the way for Chinese investment in American energy. These deals would create a new level of mutual dependence and increase funding for energy interests in Alaska and West Virginia. Both states are in need of infrastructural development to make use of undeveloped energy resources especially oil and natural gas. The potential of this collaboration marks a shift towards America being an energy exporter as well as importer. The deal would benefit the U.S. which has been seeking more international investment in its energy capital,and would allow Chinese companies to diversify their energy portfolios. This would provide the Chinese with a first- world energy investment and give them access to fossil fuels.
According to forbes, the deals were proposed as separate MOU’s or Memoranda of Understanding. MOUS between China Energy Investment Corp and West Virginia indicated an interest in the company putting 83.7 billion dollars into diversified fossil fuels. A similar agreement between Sinopec and Alaska Gasline Development Corp would invest $43 billion into natural gas. As the U.S. moves into the role of energy exporter, deals like this are likely to become more common. By 2020 according to the International Energy Agency, it is expected that the U.S will export more oil than it currently imports; this year marked a similar point for natural gas. As China is on track to become the largest oil consumer by 2030, deals like this insure American presence on the market.
For the Chinese, deals with a stable power like the United States allow safe diversification. It will give them critical access to fossil fuels outside of the Middle East and Russia. China continues to become more, dependent on foreign energy with about 65 percent of crude oil and 33 percent of natural gas imported from around the world.
With any large trade deal political fears do arise. The United States has had to assure a wary China that it will not cut off its supply should political conflict occur. The United States Department of Commerce has promised China that it would be treated as any nation lacking a free trade agreement. As the deals are not yet solidified, it remains to be seen if this is enough to persuade the wary Chinese to fully commit to the partnership. The agreements as written are entirely non- binding and for now entirely theoretical. The Chinese are not the only ones with political concerns. Many in the U.S. do not relish the prospect of exporting fossil fuels, vital for military function, to a potential rival. Fears that the agreements could weaken American power abroad still exist in some quarters, making for possible future resistance to any more such proposals. If the deals are successful they may prove well for future agreements between both countries and solidify friendly relations.
The U.S. has allowed China to import liquefied natural gas since May , which has evolved into the deals currently under consideration. As China becomes more developed, its need for fossil fuel products has grown exponentially.
If the deal is completed, the projects from it are expected to create thousands of jobs. Economic benefits to both Alaska and West Virginia would come at a much needed time for the fossil fuels industry. Alaska has had issues retaining partners for energy projects as BP, Exxon Mobil and ConocoPhillips have all withdrawn from potential pipeline construction. If Sinopec confirms its investment, it will be a reversal of fortune for the energy industry in the state. Likewise West Virginia needs China Energy Investment Corp’s presence as coal production and income levels continue to decline.
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