China trade fight puts billions in US energy projects in doubt

Bloomberg

China Energy Investment Corp pledged almost $84 billion in shale gas and chemical manufacturing projects across West Virginia after President Donald Trump’s trade mission to Beijing in November, but when it came time to discuss details officials were a no-show.
The chief executive and other officers of the world’s largest power company cancelled a visit to a petrochemical conference in Pittsburgh, where the projects were to be discussed, casting doubt on their fate amid an escalating trade war between the US and China.
“In light of the ongoing dispute between the US and China on trade, the China Energy team decided right now is not the right time for them to come and visit,” said Brian Anderson, director of the West Virginia University Energy Institute, an arm of the school that recently signed an memorandum of understanding to work collaboratively with China energy on research and training programs.
The US is due to impose tariffs on $34 billion of Chinese imports from July 6, and Trump has threatened to impose levies on another $200 billion of Chinese goods. That has put in jeopardy some of the $250 billion in trade deals between US companies and their Chinese counterparts announced in November when relations with the country were warmer, including many non-binding spending agreements on energy projects.
Among them was a joint agreement by China Petrochemical Corp., known as Sinopec Group, with Alaska Gasline Development Corp. to advance a $43 billion liquefied natural gas project. Another involved industrial gases company Air Products & Chemicals Inc.’s plan to form a joint venture with state-owned Yankuang Group Co. to operate an air separation, gasification and syngas clean-up system for a $3.5 billion coal-to-syngas production facility.
“Everything is in jeopardy,” said Barry Worthington, executive director of the US Energy Association, a group of organisations, corporations and government agencies working on energy issues. “We have a shadow now over both investment and trade relations with China and that shadow doesn’t do anybody any good.”
The trade issues with China show no sign of abating. Bloom-berg reported that the Treasury Department is planning to heigh-ten scrutiny of Chinese investments in sensitive US industries, including new-energy vehicles, robotics and aerospace, under an emergency law usually reserved for economic and national security threats. Treasury Secretary Steven Mnuchin denied in a tweet the measure would be aimed at China, while White House trade adviser Peter Nav-arro later indicated that the restrictions won’t be as damaging to growth as markets anticipate.
“These trade deals are moving targets and there are negotiations ongoing all the time,” Energy Secretary Rick Perry told reporters. “When you push over here, you may bulge out a little over here. We are a long way to getting trade deals finalised.” Perry called Trump “a very hard trader” who is “not apt to blink.” Spokesmen for China Energy and Sinopec didn’t immediately respond to requests for comment.
Even before trade tensions worsened, many of the deals were considered tentative. The non-binding MOU between China and West Virginia for instance, proposed an investment larger than the state’s gross domestic product over a 20 year period, but few details have been released. Plans include power generation, chemical manufacturing and underground storage of natural gas liquids derivatives, according to a statement from the state’s Department of Commerce.
And not all of the projects are at risk. A MOU signed between Cheniere Energy Inc., the only exporter of US natural gas from shale fields, and China National Petroleum Corp. resulted in a 25-year contract in February. In 2017 alone, demand for the fuel in China jumped 46 percent, according to Energy Aspects Ltd.