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CORRECTED-China's Sinopec eyes stake in Texas power project -report
August 15, 2012 / 2:46 AM / 5 years ago

CORRECTED-China's Sinopec eyes stake in Texas power project -report

(Corrects name in lead to Sinopec Group, not Sinopec Corp)

SINGAPORE, Aug 15 (Reuters) - Oil giant Sinopec Group along with Chinese banks are in talks to put up to $1 billion in a Texas clean energy project, in what would be one of the biggest investments by Chinese companies in the U.S. power sector, the Wall Street Journal reported on Wednesday.

The Chinese group is looking to acquire an equity stake in and provide financing to the roughly $2.5 billion Texas Clean Energy Project, which is being developed by Seattle-based Summit Power Group, the newspaper said citing people familiar with negotiations.

Sinopec Group, PetroChina and CNOOC Ltd have been leading Asia’s oil and gas acquisitions overseas, with Chinese purchases totalling $5.1 billion in the first half of this year, according to Thomson Reuters data. That compares to $16.3 billion last year and $23.4 billion in 2010.

China’s strong interest in North American energy assets, particularly CNOOC’s recent $15.1 billion bid for Canada’s Nexen , has raised alarm bells among a handful of U.S. lawmakers who fear America’s national security interests could be undermined.

Summit Power, which is also in talks with other potential investors in the United States and Europe, is seeking to carve out a role for Chinese investors that does not upset existing engineering and construction agreements, the newspaper said.

An agreement between Sinopec and Summit Power could be announced as early as September, it added.

But many of the details, including specific financial terms and the size of the equity stake, have yet to be decided, the paper said citing people familiar with the negotiations.

China’s investment will be a “significant share” of the project’s cost, consisting partly of debt and partly of equity, the newspaper said.

The 400-megawatt Texas Clean Energy Project will be an Integrated Gasification Combined Cycle facility capable of capturing between 90 and 99 percent of the carbon dioxide, sulfur dioxide, nitrogen oxide and mercury it produces.

The project will receive $450 million in federal funding, according to the U.S. Department of Energy. The facility is expected to be fully operational in 2015. (Reporting by Randy Fabi; Editing by Himani Sarkar)

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