From left, Alaska Governor Mike Dunleavy, U.S. Secretary of Commerce Howard Lutnick, U.S. President Donald Trump, Sen. Dan Sullivan (R-Alaska), and U.S. Secretary of the Interior Doug Burgum made the announcement at a presentation held at the White House Oval Office in Washington, D.C., U.S. on Wednesday, September 30, 2026. President Trump announced that South Korea plans to invest $200 billion in US energy projects, including eight projects. A nuclear power plant, a power generation facility in Texas, and a natural gas export operation in Alaska. Photographer: Yuri Gripas/Abaka/Bloomberg via Getty Images
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South Korea has taken a cautious stance on the long-planned Alaska liquefied natural gas project, despite US President Donald Trump touting it as part of the South Korean government’s $200 billion investment plan in the United States.
President Trump announced late Wednesday that the two countries had agreed to work on the $50 billion project, but South Korean President Lee Jae-myung pushed back, saying South Korea’s participation depended on financial viability and compliance.
Alaska LNG situation
The debate centers on the scale and cost of delivering Alaska’s vast natural gas resources to overseas buyers.
The Alaska LNG project aims to transport natural gas through a roughly 800-mile pipeline from Prudhoe Bay on Alaska’s North Slope to an LNG facility in Nikiski in the south, according to the Alaska Gas Line Development Corporation.
The integrated project has the capacity to produce 20 million tons of LNG per year and is estimated to cost between $44.5 billion and $54.5 billion, according to Go Katayama, chief insight analyst at Kpler.
Why is South Korea so cautious?
According to Seunghoon Yoo, a professor at the Department of Future Energy Fusion at Seoul National University of Science and Technology, it takes about seven to nine days to transport LNG from Nikiski to South Korea, compared to about 20 to 30 days from the U.S. Gulf Coast.
A shorter route would significantly reduce transportation costs and avoid geopolitical chokepoints such as the Strait of Hormuz, Yu said.
But those savings will come up against the cost of building a roughly 1,300-kilometer pipeline from Alaska’s North Slope to a liquefaction terminal in the south.
“The economics of Alaska LNG are expensive given the length of the pipeline compared to other LNG projects,” said Kit Lin Wong, head of Asia Pacific business intelligence at Poten & Partners. “It won’t be the cheapest supply for South Korea.”
Mr Wong said LNG supplies from Australia, the US and Qatar would all be cheaper. Alaska’s short shipping distances help, but the overall capital investment for the project could build three U.S. Gulf Coast projects, he said.
A key question for Korean buyers is whether a shorter route will lead to competitive landed LNG prices compared to alternatives such as Canada, the U.S. Gulf Coast and Middle East supplies, Kpler’s Katayama said.
South Korea’s caution also reflects the risk of cost overruns and the uncertainty of long-term LNG demand. The project’s long construction schedule and difficult terrain could drive up costs, while slowing demand could lock buyers into take-or-pay contracts lasting more than 20 years, Yu said.
Katayama similarly said buyers are becoming more selective about taking on additional long-term LNG contracts as South Korean gas demand from the power sector is expected to decline.
South Korea also needs to balance its strategic and trade relationship with the United States with the commercial benefits of the project, Yu said. He added that a continued focus on commercial feasibility could help the South Korean government maintain bargaining power to seek additional U.S. guarantees and financial support.
What still needs to happen?
For Korean buyers and investors, the final test will be the landed cost of Alaska LNG, which takes into account supply gas, pipeline, liquefaction, financing, taxation and transportation costs, Katayama said.
He added that greater certainty about the project’s financial framework, financing, construction and permitting risks, and the extent of U.S. government support will also be important.
South Korea’s commercial involvement in the project is still tentative. Katayama said POSCO International has a non-binding agreement covering the potential purchase of 1 million tonnes of LNG per year for 20 years and the supply of steel for the pipeline. He said the deal was separate from broader investment commitments by the South Korean government.
Additional U.S. government support, including tax incentives and financial assistance, is also important, as is the opportunity for Korean companies to participate in project construction, engineering, equipment supply, and LNG transportation, not just as buyers of LNG, Yu added.
—CNBC’s Ying Shan Lee contributed to this report.
