Kim Jung-kwan: South Korea won't invest in Alaska LNG without commercial viability

Trade Minister Kim Jung-kwan reaffirmed Thursday that South Korea will not invest in the US Alaska liquefied natural gas project unless its commercial viability is secured. He said Seoul formally expressed regret to US Commerce Secretary Howard Lutnick over President Donald Trump's portrayal of Korean participation as a done deal.

Kim also flagged two outstanding tasks: securing a supply of Korean-made gas turbines for the Texas gas combined-cycle power plant — South Korea's first US investment project — and advancing follow-up negotiations on MASGA, a $150 billion Korea-US shipbuilding cooperation initiative.

Kim held a post-announcement briefing at Government Complex Sejong on Thursday, saying the two sides had agreed on just three sentences regarding the Alaska LNG project. "The understanding shared by both the United States and Korea is that we will not proceed if commercial viability is not there," he said.

The joint fact sheet released by the two governments states that South Korea will begin reviewing the Alaska LNG project on the condition that commercial viability and domestic legal requirements are met. It also says the United States will facilitate the participation of Korean companies and help South Korea secure LNG at favorable prices. No decision on whether South Korea will invest, or on any specific investment amount, has been made.

Trump, however, treated Korean participation in the Alaska LNG project as a foregone conclusion at the White House on Wednesday (local time), and later announced on social media the launch of Korea-US cooperation on the $50 billion project — a tone that diverged from the two governments' official agreement.

Kim said Seoul conveyed its displeasure directly to Lutnick. "We expressed regret to Secretary Lutnick that what was reported Thursday went beyond what had been agreed," he said. Lutnick acknowledged South Korea's concerns and pledged to do his best to advance the project.

Kim also addressed the shifting cost estimates put forward by the US side — from $67 billion to $54 billion and then to $50 billion — calling the changes "evidence that the US project itself is not yet solidly defined." He said the US has political and commercial interests in Alaska and the LNG business, while South Korea's focus is on recovering its principal and interest, and that intense negotiations with Washington lie ahead.

He noted that the reduction in project scale was relatively positive for South Korea, but added that a final cost assessment would have to wait until Seoul receives detailed data from the US side.

Kim left open the possibility that commercial prospects could improve if the federal government-led approach proposed by the US takes shape. The Alaska LNG project has long been flagged for major risks, including permitting delays, labor supply problems stemming from harsh weather conditions along the roughly 1,300-kilometer pipeline route, and cost overruns.

"If the US federal government can swiftly resolve the chronic permitting issues and address the labor supply problem, there is clearly room for the project's viability to improve compared to before," Kim said. The government plans to make a final investment decision after receiving detailed data from the US and conducting expert reviews and on-site due diligence.

On concerns that Korean-made gas turbines may not be supplied to the Texas gas combined-cycle power plant — South Korea's first US investment project — Kim said domestic companies may not be able to meet the US requirement of delivery by 2029. He said the US side is exploring Korean company participation in other projects given existing order backlogs and delivery schedules, and that arrangements are also in place for Korean firms to participate in auxiliary equipment for the power plant.

Regarding the construction of eight large nuclear reactors in the United States — two Korean-designed APR1400 units and six Westinghouse AP1000 units — Kim said the sequencing carries significant meaning. "We wrestled quite a bit over the order as well," he said. The plan calls for building two AP1000 units first, then constructing two APR1400 and two AP1000 units in parallel, followed by the remaining two AP1000 units.

"Although it is described as parallel, in terms of sequence the APR1400 comes first," Kim said, adding that the domestic nuclear industry sees great significance in the fact that South Korea — which learned nuclear technology from the United States — will now build Korean-designed reactors on American soil.

Kim said Team Korea and Westinghouse are partners who have no choice but to move forward together. "Rather than fighting over a small pie, if we rebuild mutual trust and cooperate over a larger pie, it will benefit both sides," he said. His remarks reflected the view that Korea and the US must work together to defend and expand their share of the global nuclear market as Russia and China rapidly grow their presence.

"Nuclear is often described as a 100-year business," Kim added. "From initial discussions through construction, operation and decommissioning, it is a business that cannot be done without mutual trust between the two countries."

However, no minimum guaranteed order volume or value for Korean companies in the AP1000 construction has been set. Kim said the agreement includes language prioritizing Korean company participation but contains no specific guaranteed quantities. He expressed confidence that Korean firms' capabilities in engineering, procurement and construction as well as in major equipment and component manufacturing would be fully utilized, noting that the US side recognizes their competitiveness.

Kim said building the APR1400 units will require amending an existing agreement with Westinghouse, and that technology licensing fees as well as terms related to services and fuel remain subjects for further negotiation.

On the possibility of large funding demands concentrating at a particular point in time, Kim said the annual remittance cap has been set at $20 billion regardless of project timing. "The payment schedule and project progress will have to be aligned to some degree," he said, adding that remittances will center on the Texas project for now.

On the profit-and-loss integration mechanism for recovering investments, Kim said that if a loss occurs or principal and interest cannot be recovered from a specific project, the revenue-sharing ratio for the entire portfolio including that project will be maintained at 50-50. He said the structure — under which the ratio does not shift to 10-90 until the principal and interest on the total investment are fully recovered, even if individual projects have been paid back — differs from Japan's US investment agreement, and said this distinction is significant.

Kim expressed frustration over delays in US regulatory reforms needed to advance the $150 billion MASGA project. "The parts that the US side needs to deliver are not progressing, and we are actively pressing them," he said, adding that South Korea intends to push the project forward in earnest once the overall framework is in place.