Energy economy powers Houston

The presence of Chinese corporations in Houston was felt stronger than ever at the second annual gala of the local chapter of the China General Chamber of Commerce-USA (CGCC) on Dec 15.

About 200 officials and business executives from both China and US gathered to celebrate the ever increasing economic ties between the southern US and China.

Air China, which operates direct flights between Houston and Beijing, was awarded Outstanding Member of the Year; CNOOC-Nexen and Hisense USA Corp were recognized for their community contributions; and Wanhua Chemical US Holding and LiuGong North America were named the Most Influential Companies of the Year.

"Since 2015, we have grown to 87 members, and CGCC-Houston has now become the commercial service organization for Chinese and US companies in the southern US," said Li Shaolin, chairman of CGCC-Houston.

Of the four awarded companies, two work in energy with Wanhua Chemical making new moves in the Gulf of Mexico - it plans to invest in a $1.1 billion chemical plant in Louisiana, an announcement made earlier this year.

The energy sector is viewed as a major force to further economic ties between the southern US and China.

During President Trump's recent visit to China, Houston-based Cheniere Energy, owner of the first liquefied natural gas (LNG) export terminal in the US, signed a memorandum of understanding (MOU) with China National Petroleum Corp (CNPC), for long-term LNG sales and purchase.

"The deal is valued at $10 billion and details will be worked out," said Li, president of PetroChina International (America), Inc (PCIA), a Houston based subsidiary of CNPC.

New Orleans-based American Ethane Company (AEC) negotiated a $26 billion deal to deliver for 20 years ethane gas from a terminal it is developing on the Texas Gulf Coast to a new ethylene plant in China to be built by the Nanshan Group in the middle of 2017. The deal was inked in November.

ACE CEO John Houghtaling said the economic value of the gas sale will exceed $26 billion by several billion dollars more from infrastructure construction in both the US and China.

The two large deals seem to be just the beginning of a new trend. Industrial experts are expecting to see more similar energy deals between China and the US.

Due to technology breakthroughs in shale gas and oil extraction, the US has shifted from an energy importer to exporter.

"The US used to be a major player in the energy industry by being the major market, now it holds more power to be both the market and the source for energy," Li said.

PCIA exported about one million tons of crude oil from the US to China in 2017. Li said the initial amount is small due to the lack of existing infrastructure for loading crude oil at Houston's shipping channel. That will change once the infrastructure is in place.

The Gulf Coast, primarily Texas and Louisiana, accounts for 65 percent of the capacity of US refineries. The proximity to ports and the Panama Canal will only fuel more economic activity between the two major economic powers, Li said.

"Currently there are more than 20 LNG export terminal proposals out there. Once built, we will see a big jump in LNG and crude oil export volume to Asia with China as a major destination," Li said, adding that US surpluses of oil and gas will also result in other oil/gas byproducts to be exported to China and other countries in Asia.

James Chen, Asia/Pacific director of economic development and tourism division of the Texas governor's office, said he's getting more and more inquiries from China. "People are looking for investment opportunities in many areas with more focus on LNG and beef exports right now," Chen said.

According to Chen, from 2015 to 2017 in M&A deals alone, China has invested about $1.6 billion in Texas.

Indeed, the economic exchange between the southern US and China is thriving on many fronts. Consul General of China in Houston Li Qiangmin said that based on official data, direct investment to the eight southern states in his consular districts has been over $21 billion in recent years.

In Texas alone, China has invested more than $7.9 billion since 2000 and created more than 5400 jobs.

Li listed some notable areas. In innovation, there is the annual mechanism of the China-US innovation and investment summit in Houston.

mayzhou@chinadailyusa.com