Trade minister says Middle East war gave Alaska LNG project new strategic value

The South Korean government has shifted its stance on the Alaska LNG development project, moving away from an outright rebuttal and toward acknowledging that the venture has gained new strategic value in the wake of the Middle East war.

Minister of Trade, Industry and Energy Kim Jung-kwan appeared Tuesday before the National Assembly's trade, industry and small venture business committee for a national audit. Democratic Party of Korea lawmaker Song Jae-bong asked how the government planned to respond to US President Donald Trump's unilateral announcement of South Korean investment in the project. Kim said it was "not appropriate to comment one by one on remarks made by a foreign head of state" and that Seoul was "closely discussing the relevant details with the US government."

Trump had earlier unilaterally announced that South Korea would invest $50 billion in the Alaska LNG project and claimed the country would commit $8.4 billion to an Enhanced Oil Recovery project.

Kim's remarks at Tuesday's audit represented a notable shift in tone from his initial response. On Thursday, he told a briefing at Government Complex Sejong that "South Korea and the United States share the understanding that the Alaska project will not proceed unless it has commercial viability."

Kim also said he had raised objections with US Commerce Secretary Howard Lutnick and expressed regret over Trump's announcement of investment terms that had not been agreed upon.

The recalibration appears to reflect the asymmetric trade dynamic in which the United States can invoke Section 301 of the Trade Act and other tools to raise tariffs at any time. On Friday, Trump warned that he would "double" the terms if South Korea did not "reach an agreement soon" on the Alaska project.

Kim said the biggest shock from a trade policy standpoint in recent months had been the import ban imposed on Canada, adding that "stably managing the trade environment is more important than anything else in conditions where unexpected measures can occur at any time."

He added that the government was working to maintain the 15 percent tariff rate on automobiles and other South Korean goods, and asked for understanding given the complexity of the US domestic schedule and the ongoing state of negotiations.

Kim also highlighted positive aspects of the Alaska LNG project during the audit.

Responding to a question from People Power Party lawmaker Choi Su-jin, Kim said that while the project's economics had clearly been too weak to move forward in the past, "there is clearly a new strategic value that has emerged as a result of the Middle East war."

Kim said the conflict had made it harder to source LNG from the Middle East, and that shipments departing the Persian Gulf were being rerouted around the Cape of Good Hope due to disruptions in Panama Canal transit.

"If the Alaska LNG development project succeeds and we are able to bring in LNG produced there, it clearly has strategic value," he said.

Kim also noted that the United States had shifted the Alaska LNG development project from a privately led initiative to one driven by the federal government, citing the change as another factor worth considering.

Choi, however, criticized the project, which had not advanced for 40 years due to poor economics, saying the US side had included language in a fact sheet describing an "agreement to commence work" and was treating large-scale investment as a foregone conclusion.

Choi said the conflicting announcements between Seoul and Washington — made before feasibility and viability assessments had even been completed — had damaged diplomatic credibility and handed the United States a pretext for tariff retaliation. She urged the committee to request a Board of Audit and Inspection probe into the negotiations as a whole.

Kim rebuffed the criticism, saying that "commencing a review," as he had repeatedly stated, was premised on commercial viability. He added that the fact sheet had been jointly and simultaneously released by both South Korea and the United States, and that "nothing was hidden from the National Assembly."

The Alaska LNG development project involves transporting natural gas produced in the North Slope of Alaska through a roughly 1,300-kilometer pipeline to the southern Alaska port of Nikiski, from which it would be exported to Asia and other markets.

Trump announced on Wednesday that South Korea would invest in the Alaska LNG project as part of a broader announcement of South Korean investment commitments to the United States, with Commerce Secretary Lutnick claiming the investment would total more than $50 billion.

The South Korean government, however, maintains that the Alaska LNG project remains at the review stage and that no investment has been finalized.

Choi said a review of internal Ministry of Trade, Industry and Energy documents had confirmed that external feasibility studies had been commissioned for South Korea-US strategic investment projects Nos. 1 through 3, and asked what those projects were. Kim said "Nos. 2 and 3 have nothing to do with the Alaska project."

Kim added that he could provide details on the specific projects on the condition that confidentiality from outside parties was guaranteed.