A natural gas pipeline at the Port of Seward in Alaska transports liquefied natural gas through a 1,287-kilometer pipeline stretching from the northern region of North Slope to Nikiski on the southern coast. gettyimagesbank
Korea's potential participation in a natural gas development project in Alaska, highlighted in U.S. President Donald Trump's speech to Congress on Tuesday, has come to the fore, impacting the nation's economy and prompting relevant sectors and firms to assess the potential benefits and challenges of joining the initiative.
Trump said Korea, Japan and other countries are seeking to invest in the massive natural gas pipeline project.
One day after his address, the Korean stock market responded positively to the promising prospects for Korean energy firms' venture into Alaska, with major energy development companies and those manufacturing pipes and valves seeing their share prices surge.
SeAH Steel's stock rose 9.57 percent from the previous day, reaching 198,000 won ($149.98). Its holding companies, SeAH Holdings and SeAH Steel Holdings, also saw their share prices increase by 6.51 percent. Dongyang Steel Pipe gained 14.49 percent in the stock market, while HS Valve rose by 4.57 percent on the Kosdaq.
According to the Alaska Gasline Development Corp. (AGDC), an independent public company established in 2010, the state's North Slope natural gas reserve holds one of the world's largest concentrations, with about 35 trillion cubic feet of resources and the potential for an additional 200 trillion cubic feet.
The state operates a gas pipeline stretching more than 1,280 kilometers from north to south, along with a gas treatment plant capable of processing 3.9 billion cubic feet per day. Alaska also exports up to 20 million tons of liquefied natural gas annually.
Korea Gas Corp.'s liquefied natural gas storage site in Incheon's Songdo in July 2024 / Courtesy of KOGAS.
According to the company, Alaska has been supplying LNG to Asian countries for more than 45 years. It touts the state's proximity to the continent, which allows a shorter maritime shipment travel of seven to nine days.
“Alaska has earned a reputation of reliability and dependability,” AGDC says on its website, highlighting the state's abundant LNG reserve and geographic closeness to Asia.
Despite Alaska's potential as an LNG supply hub for Asia and Trump's claim of Korea's interest in it, Korean LNG importers and other energy developers remain cautious about investing in Alaska. Some even express doubts regarding the project's profitability.
An official from SK Innovation said that if the project was as lucrative as Trump says, a major energy developer from Korea would have already entered.
"I believe that Trump, while using his tariff threats against various countries, is seeking investors for the project who will reluctantly comply," the official said.
An official from POSCO International said that key factors, such as price rates and import volumes, must first be confirmed as feasible before the company decides to invest in the project.
“Trump is apparently signaling that he is looking for investors for the Alaskan LNG project. Although it would diversify Korea's LNG import locations across the world, whether to invest in the project should be determined only after all the key factors are considered," the official said.
"This is sort of like the Daewang Gorae project,” he added, referring to the first drill site for the Korean energy ministry's ongoing natural gas and crude oil development project in the country's East Sea, which was discovered last month to be far from economically viable.
If the Korean government decides to invest in the Alaskan LNG project, the largest piece of the pie is expected to go to Korea Gas Corp. (KOGAS), which imports about 80 percent of Korea's entire natural gas supply of 46 million tons per year.
KOGAS plans to carefully review the Alaska gas development project in its early stages, focusing on its business viability.
"Importing LNG from Alaska certainly helps us by further diversifying our global energy supply sources. If we agree with the U.S. to import LNG in a large volume for an affordable price, Alaska would be a feasible addition to our supply chain," a KOGAS official said.
According to Minister of Trade, Industry and Energy Ahn Duk-geun, Korea's total volume of imported LNG from the United States since 2017 has been the world's largest. Last year, Korea's largest LNG import came from Australia, accounting for 24.6 percent of total imports, followed by Qatar at 19.2 percent, Malaysia at 13.2 percent, and the U.S. at 12.2 percent.