Hitchhiker in the Corner Office

What does China seek in the Chesapeake Shale Deal just announced the other day? The total deal is over $2 billion and gives China a minority stake and have a 1/3 ownership of Chesapeake’s South Texas Shale assets.

This deal is big, not because of the dollars spent or the natural gas resources itself. The money is a drop in the bucket for the Chinese and there is very little chance that the energy can be or will be shipped to China. That much we know cannot happen. But the bigger issue at hand is how this will implicate the transfer of intellectual property and how the US will deal with the juggernaut of the Chinese economy.

The US already owes a ton of money to China and foreign nations. It is a positive to see that China is “reinvesting” its stockpile of Dollars back to the US. But with little or few options for China to invest its billions of dollars other than US Treasury Notes, I can see why they would want to put their dollars into an asset that will eventually bring long term results back to their homeland.

The real endgame here for China is to gain a technological edge back home so that they can begin to tap into the shale for future energy resources. Coal has been long the cheap energy solution in China. But with resistance from the outside and pollution rampant in many of the metropolitan Chinese cities, natural gas may be the solution to the pollution issues in China.

What are your thoughts? Are US energy companies giving away too much in technology and intellectual property? Or is this a positive that China is diversifying assets back into the US?