By Jarrett Renshaw and Trevor Hunnicutt
WASHINGTON, Sept 30 – President Donald Trump may announce plans as early as Wednesday to utilize South Korea's promised strategic investment package of approximately $54 billion to develop a liquefied natural gas (LNG) facility in Alaska and several other significant projects in the U.S., according to two sources familiar with the discussions.
This announcement is expected to come as part of a series of economic and investment initiatives ahead of the midterm elections in November, as Trump aims to strengthen his administration's economic performance to gain voter support.
Trump's approval rating has dropped to 32%, the lowest of his political career, based on a Reuters/Ipsos poll conducted this month. Voters are expressing concerns about the situation in Iran and rising gasoline prices.
Alaska has become a key battleground for Republican efforts to maintain control of the U.S. Senate, with many analysts viewing the race between incumbent Republican Dan Sullivan and Democrat Mary Peltola as highly competitive.
A Potential Energy Source for Asia
The Alaska LNG project will involve a pipeline to transport natural gas from the North Slope to a liquefaction facility located on the state's southern coast, enabling the gas to be shipped to Asian markets.
This would mark the first U.S. project with direct access to Asia, which is the fastest-growing market for liquefied natural gas.
However, before addressing political needs or diplomatic pressures, it's important to fully assess the commercial rationale and feasibility of any investment that could place a significant burden on the public, said Kim Sung-won, a South Korean opposition lawmaker, in an interview with Reuters on Wednesday.
"U.S. investments should be structured in a way that benefits both sides, creating opportunities for South Korean companies, expanding markets, and securing stable energy supply chains," Kim, a member of the People Power Party, stated after a briefing last week by South Korea's industry ministry on the U.S. plans.
As chair of the South Korean parliament's trade committee, Kim mentioned that the National Assembly would carefully analyze the profitability and financial risks of U.S. investment projects, as well as tangible advantages for Korean companies.
South Korean analysts and investors view the projects as "unbelievably unfair" for their government and companies, as Seoul would need to invest alone but share the profits with the United States, according to an unnamed analyst in Seoul who spoke to Reuters about this sensitive issue.
Japan's two largest LNG importers, JERA and Tokyo Gas, have signed preliminary agreements to purchase a combined 2 million metric tons annually from Alaska LNG if the project moves forward.
The project's developer, Glenfarne, announced in March that it had secured commitments for 13 million tons per year. To gather financing, it needs agreements for an additional 3 million tons and to finalize all commitments, the company noted.
Trump has consistently championed the project as a means to boost U.S. energy exports and strengthen relationships with allies such as South Korea and Japan.
However, the project has experienced years of uncertainty regarding its costs, financing options, and commercial viability, including analyses conducted by the South Korean and Japanese governments. Investment from Seoul could serve as a potential source of funding for the project.
Officials from South Korea and the U.S. have been collaborating to identify projects for the $350-billion strategic investment package that Seoul pledged under a trade agreement last year. Topics discussed include the Alaska LNG project, nuclear power, and a gas-fired power initiative in Texas, among others.
The South Korean embassy in Washington did not immediately respond to a request for comments.
Seoul and Washington have maintained a close alliance since the Korean War from 1950 to 1953, although tensions have surfaced in recent months due to differences in trade and security cooperation, along with some sharp criticisms of Seoul by Trump.