Trump unveils US$200 billion South Korean investment in US; Seoul hedges on Alaska pipeline

WASHINGTON: United States President Donald Trump unveiled plans on Wednesday (Sep 30) for South Korea to invest some US$200 billion in US projects, but Seoul quickly suggested one key element, a US$54 billion pipeline for a liquefied natural gas (LNG) project in Alaska, was not yet set in stone.

The announcement from the White House amounted to the first set of major projects under a broader US$350 billion strategic investment package South Korea made as part of a trade agreement with Washington last year. The package included US$150 billion for shipbuilding and US$200 billion for strategic investments.

"Thanks to the agreements my administration has secured with the Republic of Korea, they will invest up to US$200 billion," Trump said from the Oval Office.

He said the investment would include the construction of eight large-scale nuclear power plants, a natural gas pipeline and a 6-gigawatt power generation facility in Texas.

The announcement is the latest in a series of economic and investment deals Trump is highlighting ahead of November's midterm elections, as he seeks to reinforce his economic record amid voter concerns over the Iran war and high gasoline prices.

The pipeline project could carry political significance in Alaska, where Republican Senator Dan Sullivan faces a competitive re-election race against Democrat Mary Peltola. Sullivan attended Wednesday's announcement.

South Korea's government, however, said the pipeline project would only go forward if certain commercial and legal conditions are met. 

Seoul confirmed other elements of Trump's announcement, saying it would invest US$22.3 billion in a Texas gas power project to power artificial intelligence data centers, as well as US$120 billion to build eight nuclear reactors.

PROJECT LONG IN LIMBO

The Alaska LNG project, if it ultimately goes forward, includes an 807-mile (1,300km) pipeline carrying natural gas from the North Slope to a liquefaction facility on Alaska's southern coast, allowing the fuel to be shipped to Asian markets. The project is designed to transport about 3.9 billion cubic feet (110 million cubic metres) of natural gas per day and produce up to 20 million metric tons of LNG annually, according to the White House.

Trump has repeatedly promoted the project as a way to expand US energy exports and strengthen ties with allies including South Korea and Japan.

But the project has faced years of uncertainty over its cost, financing and commercial viability. South Korea's investment could provide a potential source of financing, although Seoul has previously said projects under its US investment package must meet commercial viability standards.

South Korean opposition lawmakers have raised concerns about the commercial viability and fiscal risks of investments in US projects.

South Korea's industry ministry said last week that a more than 6-gigawatt gas-fired power plant in Encinal, Texas, was the first project selected under the US$200 billion strategic investment program.

COMMITMENTS NEED TO BE BINDING

Japan's two biggest LNG importers, JERA and Tokyo Gas, have signed preliminary agreements to buy a combined 2 million metric tons a year from Alaska LNG if it is built.

Glenfarne, the project's developer, said in March it had lined up commitments for 13 million tons a year, but needed another 3 million tons to secure financing and make all commitments binding. It did not immediately respond to a request for comment about Wednesday's plan.

The eight nuclear plants would form part of Trump's effort to expand US nuclear generation as electricity demand rises, including from data centres and manufacturing. South Korea has been discussing a potential investment in US nuclear projects as part of the broader package.

The Texas gas-fired power project is expected to supply electricity to energy-intensive facilities, including semiconductor plants and data centres. South Korean officials have said the project was selected after reviews of its commercial viability.