Alaska LNG investment demands careful scrutiny

U.S. President Donald Trump announced on Thursday that Korea’s participation in the Alaska liquefied natural gas (LNG) project was virtually a done deal. U.S. Commerce Secretary Howard Lutnick went further, putting the investment at more than $50 billion. This differs from the Korean government’s explanation that it agreed only to begin reviewing the project on the condition of “commercial reasonableness.”

The United States’ announcement appears aimed, in part, at its November midterm elections, but it is regrettable that Washington presented the matter unilaterally without reflecting the position of Seoul, an ally and prospective investor.

The fact sheet released by the two countries lists three Korean investment projects in the United States: a gas-fired power plant in Texas; eight nuclear reactors, including two Korean-designed units; and the Alaska LNG project, which remains under consideration.

Seoul is cautious about Alaska because the risks are substantial. Building a 1,300-kilometer (807.8-mile) pipeline through severe Arctic conditions would be an enormous engineering challenge, and it remains uncertain whether the project could generate enough returns to justify its cost. Such concerns led major U.S. oil companies, including ExxonMobil, which once considered participating, to withdraw.

But the Trump administration is pushing the project on its own political timetable. Republican Sen. Dan Sullivan of Alaska, who faces a competitive re-election race, and Alaska Gov. Mike Dunleavy attended the White House announcement.

U.S. unilateralism is now testing the principle of commercial reasonableness that Seoul and Washington agreed should govern Korean investment in the United States. It is true that Korea cannot simply dismiss U.S. requests, since the investment negotiations began as part of an agreement to lower tariffs that Washington imposed on Korean exports.

But the fact sheet explicitly states that work on the Alaska project is subject to commercial reasonableness and compliance with applicable domestic legal requirements. As a result, Korea must follow the agreed procedures by scrutinizing the project’s viability and demanding every possible measure from Washington to ensure its safety and economic feasibility.

At the same time, Seoul should press for faster implementation of security agreements that remain stalled, including construction of nuclear-powered submarines and U.S. support for Korea’s uranium enrichment and spent nuclear fuel reprocessing.

For Korea, the ultimate success of negotiations with Washington will depend on whether it secures a balance of economic and security interests. A politically attractive announcement in Washington cannot substitute for rigorous commercial judgment in Seoul at home, particularly when tens of billions of dollars and long-term national interests are at stake.