Mike Dunleavy, governor of Alaska, from left, Howard Lutnick, US commerce secretary, US President Donald Trump, Senator Dan Sullivan, a Republican from Alaska, and Doug Burgum, US secretary of the interior, during an announcement in the Oval Office of the White House in Washington, DC, US, on Wednesday, Sept. 30, 2026. Trump unveiled plans for South Korea to invest $200 billion in US energy projects, including eight nuclear power plants, a Texas power generation facility and an Alaska natural gas export venture. Photographer: Yuri Gripas/Abaca/Bloomberg via Getty Images
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South Korea is taking a cautious approach to the long-planned Alaska liquefied natural gas project, despite U.S. President Donald Trump touting it as part of Seoul’s $200 billion investment package in the U.S.
Trump said 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 would hinge on its financial viability and legal compliance.
Alaska LNG situation
At the heart of the debate is the scale and cost of getting Alaska’s vast natural gas resources to overseas buyers.
The Alaska LNG project seeks to transport natural gas through an approximately 800-mile pipeline from Prudhoe Bay in Alaska’s North Slope to an LNG facility in Nikiski in the south, according to the Alaska Gasline Development Corporation.
The integrated project, which would have capacity to produce 20 million metric tons of LNG annually, is estimated to cost between $44.5 billion and $54.5 billion, according to Go Katayama, principal insight analyst at Kpler.
Why is South Korea cautious?
Shipping LNG from Nikiski to South Korea would take roughly seven to nine days, compared with around 20 to 30 days from the U.S. Gulf Coast, according to Seung Hoon Yoo, professor at the Department of Future Energy Convergence at Seoul National University of Science and Technology.
The shorter route could significantly reduce transportation costs and also avoids geopolitical chokepoints such as the Strait of Hormuz, Yoo said.
But those savings come up against the cost of building a roughly 1,300-kilometer pipeline from Alaska’s North Slope to the liquefaction terminal in the south.
“The economics of Alaska LNG is expensive given the long pipeline versus other LNG projects,” said Kit Ling Wong, head of business intelligence for Asia Pacific at Poten & Partners. “It will not be the cheapest supply for South Korea.”
Wong said LNG supplies from Australia, the U.S. and Qatar would all be cheaper. While Alaska’s shorter shipping distance helps, she said the project’s overall capex can build three U.S. Gulf projects.
For South Korean buyers, the key question is whether the shorter route can translate into a competitive landed LNG price compared with alternatives such as LNG Canada, the U.S. Gulf Coast and Middle Eastern supply, Kpler’s Katayama said.
South Korea’s caution also reflects the risk of cost overruns and uncertainty over long-term LNG demand. The project’s lengthy construction timeline and challenging terrain could push costs higher, while slowing demand could leave buyers locked into take-or-pay contracts lasting 20 years or more, Yoo said.
Katayama similarly said an expected decline in South Korea’s gas demand from the power sector is making buyers more selective about taking on additional long-term LNG commitments.
South Korea also has to balance its strategic and trade relationship with the U.S. against the project’s commercial merits, Yoo said. Maintaining its focus on commercial viability could help Seoul retain negotiating leverage to seek additional U.S. guarantees or financial support, he added.
What still needs to happen?
For South Korean buyers and investors, the ultimate test will be the landed cost of Alaska LNG after accounting for feedgas, pipeline, liquefaction, financing, taxation and shipping costs, Katayama said.
Greater certainty around the project’s fiscal framework, financing, construction and permitting risks, as well as the extent of U.S. government support, will also be important, he added.
South Korean commercial involvement in the project remains preliminary. POSCO International has a non-binding agreement covering potential purchases of 1 million metric tons of LNG annually for 20 years as well as steel supply for the pipeline, according to Katayama. He said that the agreement is separate from any broader South Korean government investment commitment.
Additional U.S. government support, including tax incentives and financial assistance, would also be important, along with opportunities for South Korean companies to participate in the project’s construction, engineering, equipment supply and LNG shipping, rather than serving solely as LNG buyers, Yoo added.
—CNBC’s Ying Shan Lee contributed to this report.
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