China Petrochemical Corp., Sinopec, is in advanced talks about investing $1 billion in a Texas clean-energy project in what would become the largest investment by a Chinese company in the US power sector in history.
Additionally, the company has already invested billions in US shale-gas fields. The move would help Sinopec further build favor in the US market, acquiring energy reserves and production expertise.
In addition to tax benefits, the project has secured $450 million in grants from the US Department of Energy and has attained the necessary permits and contracts to buy San Antonio's electricity for the next 25 years.
Meanwhile, Sinopec rival Cnooc Ltd just made a deal for Canada's Nexen Inc., which includes some Gulf of Mexico properties, which has Chinese oil-industry officials wary that their energy investments in the US will be criticized.
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Efforts to collaborate on clean-energy investment have been undermined by trade disputes, including a US anti-dumping case against solar-panel makers. Regardless, Sinopec is working on presenting itself in a different light.
In an agreement between Sinopec and Seattle-based Summit Power Group LLC, a project could begin as early as September to use coal more cleanly through a coal-gasification plant that would use captured CO2 for oil recovery.
Sinopec will use the experience from the projects to bolster enhanced oil recovery efforts in China's large Shangli oil field in Shandong, according to the Wall Street Journal.