Houston, China groups partner on energy

China's leading industrial organization and Houston's largest chamber of commerce signed a memorandum of understanding to forge a strategic cooperative relationship between Houston and China in the energy sector on Thursday.

About 30 high-level government and business leaders, led by the China Petroleum and Chemical Industry Federation (CPCIF), were welcomed by the Greater Houston Partnership (GHP).

"I think this is a good start for the relationship. This is the first MOU we ever signed with a city," said Pang Guanglian, member of the executive board of CPCIF.

CPCIF has more than 1, 700 member companies, including big names such as CNPC, Sinopec, Cnooc and SinoChem. About 70 percent of the operations of China's petroleum and chemical industry are under its umbrella. The organization has signed agreements with many countries in the past.

Pang said the decision was due to the fact that Houston has the advantage of rich gas and oil resources with so many major oil and gas companies.

"China imports a lot of energy products, including crude oil, gas, ethane and such. I believe China and US will soon reach a trade agreement. When that happens, China will definitely import a lot of crude oil, gas, ethane and other refined petrochemical products. The US will find a big market in China for their energy product," Pang said.

Pang said executives from more than 20 member companies were among the delegation. "A lot of Chinese companies are willing to come to the US to invest. Some already made the decision to make a long-term investment in the US."

Bob Harvey, CEO and president at GHP, said that despite the trade friction, Houston's trade with China grew to about $20 billion in 2018.

"GHP is proud to work with CPCIF and secure the future for the dynamic region by forging an alliance with an important China trade center," Harvey said.

According to CPCIF Vice-Chairman Fu Xiangsheng, as the No. 1 crude oil importer in the last two years, China also became the top liquefied natural gas (LNG) importer in 2018.

"The US has become the largest energy producer in the world. We hope to have wider cooperation with GHP by signing the strategic cooperation MOU," Fu said.

GHP Vice-President Horacio Licon said that the deal with China is extremely important for Houston.

"We are increasing production in the Permian Basin [in west Texas] and the Gulf region. We want to find markets for those products. China is the largest market, and it's a priority for Houston to have access to that market," Licon said.

Licon said GPH is paying close attention to the ongoing trade talks between the US and China because they are important to Houston's export of energy products.

"We have encouraged our elected officials to take a look and understand the benefit of the trade relationship with China," he said.

Jensen Shen, director at GHP, said the MOU will enable both organizations to have a mechanism to help export energy products from the Gulf of Mexico to China.

"Houston will benefit greatly once the trade agreement between China and the US are reached in the next couple of months," he said.

Regardless, Shen said the business between the US and China will move forward, as evidenced by recent activities between Texas and China.

In January, Houston-based American Ethane announced plans to ship ethane to China from Beaumont, Texas.

A $1.5 billion ethane-export facility in east Texas is under construction and expected to be completed in three years. The 20-year deal involving three Chinese companies is valued at $72 billion.

Zhejiang Satellite Petrochemical Co Ltd and its partner are currently building a $630 million ethane terminal in east Houston. It's expected to be completed by the third or fourth quarter in 2020.

Satellite Petrochemical signed an ethane deal valued at $15 billion with Dallas-based Energy Transfer Partners last year.