U.S. President Donald Trump has formally unveiled South Korea's investment plans in the United States, placing the Alaska liquefied natural gas project front and center. With detailed negotiations still needed to establish the venture's commercial viability, Washington's treatment of Korean participation as a settled matter could become another flashpoint in carrying out the investment pledges, analysts say.
According to Reuters, Bloomberg and other foreign media on the 30th, Trump decided to include the roughly $54 billion (about 73.2 trillion won) Alaska LNG project among the U.S. investment projects. Drawing attention is the expected turnout of Alaska officials at the announcement. Alaska Governor Mike Dunleavy will attend, along with Republican Sen. Dan Sullivan and Republican Rep. Nick Begich, both of whom represent the state. The lineup is read as a sign that Washington is focusing on Alaska LNG among the three U.S. investment projects.
Seoul, by contrast, has been cautious about joining the Alaska LNG project. According to political sources, the two governments have agreed on a specific direction for only one project: the Encinal LNG combined-cycle power plant in Texas. For the construction of eight large nuclear reactors and the Alaska LNG project, whether commercial viability can be met depends on the scale of investment and detailed terms, and further talks are needed.
The Alaska LNG project involves extracting natural gas in northern Alaska, near the Arctic, transporting it through about 1,300 kilometers of 42-inch steel pipe to Nikiski in southern Alaska, and exporting it to other countries. The project is considered technically demanding because the pipeline crosses high ground and because workers are hard to recruit for the Alaskan cold. Permafrost in the high-latitude polar region, which softens or heaves as it freezes and thaws, is also cited as a complicating factor.
For those reasons, experts have advised caution in deciding on participation. Plans to produce and export Alaskan LNG have been floated since the 1970s but repeatedly collapsed over weak economics. The project now under discussion was itself pushed by the state of Alaska in the 2010s and nearly ran aground in 2016, when global energy majors including BP, ExxonMobil and ConocoPhillips withdrew over surging costs, before being kept alive.
"If the Alaska LNG project has been locked in, we need to examine closely what favorable terms the government secured in return," said Kim Tae-hwang, a professor of international trade at Myongji University. "If the United States simply makes the announcement and the remaining details have to be worked out later, things will become quite confusing." An industry official likewise said, "Construction costs in the United States are soaring, so the actual cost could be far higher than current estimates," adding, "We also have to consider that securing economic viability becomes difficult if geopolitical instability eases and LNG prices fall."
Despite those concerns, Trump has shown keen interest in the Alaska LNG project since early in his term. It aligns with an agenda that encourages fossil fuel development, and Alaska is one of the Republican Party's strongholds. With the Trump administration's approval ratings having plunged, Alaska is projected to become one of the biggest battlegrounds in November's midterm elections, making the hunt for votes urgent for the president.
Earlier this month, Trump pressed Korea on investment during a question-and-answer session with reporters at the White House, saying Korea and Japan were heading to Alaska to build a pipeline. In a joint address to both chambers of the U.S. Congress last year, he also said he wanted Korea and Japan to invest trillions of dollars each in the Alaska LNG project.
Some argue, meanwhile, that the Alaska LNG project is worth pursuing when the prospects for Korean corporate participation and supply-chain diversification are taken into account. POSCO International has already signed a framework agreement with Glenfarne, the Alaska LNG developer, to buy 1 million tons of Alaskan LNG a year for 20 years. The move reflects an eye on supplying steel pipe during pipeline construction.
"In oil and gas projects, early investors are typically granted rights to a certain share of output," an energy industry official said. "Alaska is closer than the Middle East, which is an advantage on the supply side." The government is strengthening policies to diversify fossil fuel supplies amid the U.S.-Iran war, and Alaska LNG could be a good solution, the official said.
