Exxon Mobil Corp. closed a deal of a multibillion-dollar petrochemical project and a gas import terminal with China. Analysts said that it shows that China is still open for business even though the trade tension between the two nations is feared to further escalate.
The corporation is an Irving-based energy giant who signed a joint framework agreement with the Guangdong provincial government after a preliminary deal in November. The energy giant said that the chemical complex that is expected to operate in 2023 remains a subject of discussion in a final investment decision.
The corporation's investment was signed as US president Trump is feared to impose additional tariffs to another $200 billion of Chinese products after a public-comment period is concluded on Thursday. China vowed that they will meet the tariffs with retaliatory levies on American products that might including the liquefied natural gas exports.
Laban Yu, a Hong Kong-based analyst at Jefferies Group LLC said in a phone call that China's strong economic growth and thirst for natural gas imports seem to set a positive tone for the project from the get-go. He added that China wants to send a message to US companies that the country is still open for business through the Exxon Deal regardless of what Trump may do with the trade tariffs.
The contents of the agreement signed on Thursday included the provincial government's support of the Huizhou LNG receiving terminal. Exxon said in a statement that they plan to participate in the terminal through supplying LNG. The deal makes Exxon be one of the first global energy majors to invest in China's gas infrastructure that gives them the opportunity in tapping the nation's increasing demand for fuel.
According to an email sent by Allan Go, an Exxon spokesman in Beijing, the LNG project is at the very initial stage and it is a potential opportunity under ExxonMobil's evaluation.
The energy giant has expanded its petrochemical business in Asia after the purchase of the Jurong Aromatic Corp. in Singapore. The country is also the base of the energy giant's largest integrated oil refinery. In the last decade, the company has also partnered with China Petroleum & Chemical Corp. based in the southern province of Fujian and the Saudi Arabian Oil Co.
It was reported that the China Petrochemicals project planned to be constructed at the Huizhou Dayawan Petrochemical Industrial Park will include an ethylene plant that with 1.2 million metric tons annual capacity, two polyethylene trains and two polypropylene lines.
