On Tuesday (September 22), the South Korean government announced its first investment project under a $350 billion investment arrangement with the United States. The initial investment will be in a natural gas power plant in Texas, while negotiations for nuclear power and Alaska liquefied natural gas (LNG) development projects are also underway.
South Korea’s Minister of Industry and Commerce, Kim Jung-gwan, reported to the National Assembly’s Industry Committee that the government has decided to proceed with the construction of a combined-cycle gas turbine power plant with a capacity of about 6.3 gigawatts in Encinal, Texas. The total investment for this project is approximately $22.3 billion, with plans to supply power to local artificial intelligence data centers and semiconductor factories.
According to the current plan, the project will first build a 1.4-gigawatt gas-fired power facility, with a phased increase to a total capacity of 4.9 gigawatts for the combined-cycle power generation. The South Korean government estimates that the project can generate revenue of approximately $43.29 billion to $45.43 billion in 20 years, enough to recover the principal and interest.
It is reported that South Korea will bear all investments in the power project and will share ownership with American partners. Furthermore, the investment arrangement still needs to go through the relevant procedures on the U.S. side and continue negotiations with U.S. Secretary of Commerce Howard Lutnick.
In addition to the Texas power project, the South Korean government has also formulated plans to advance nuclear power and Alaska LNG projects in the United States, although both projects have not yet been finalized.
Regarding nuclear power, South Korea and the U.S. are discussing the construction of up to 8 large nuclear reactors in the United States. Among these, 6 are considering using the U.S. Westinghouse Electric Company’s AP1000 technology, while the other 2 are considering using South Korea’s domestically designed APR1400 reactors. South Korea is also negotiating to acquire a 5% to 10% stake in Westinghouse Electric to facilitate Korean companies’ participation in U.S. nuclear projects.
The Alaska liquefied natural gas project is also under consideration for further discussions, but a final investment decision has not yet been made, pending a more thorough evaluation of the project’s commercial viability.
These investment arrangements stem from the South Korea-U.S. trade agreement. As part of the arrangement to reduce U.S. tariffs on South Korean goods to 15%, South Korea has pledged a total of $350 billion to the U.S., with $150 billion allocated for the shipbuilding industry and $200 billion for strategic investments.
The South Korean government has emphasized that the scale of strategic investments in the U.S. should not exceed $20 billion annually or a total of $200 billion. South Korean President Lee Jaemyung previously stated that negotiations have progressed from an overall agreement to specific project stages, with South Korea aiming to ensure that investments meet “commercial viability.”
Some South Korean lawmakers have questioned the profitability of the investment projects and called for enhanced parliamentary oversight. However, the government believes that based on the 20-year revenue arrangement, the projects demonstrate commercial viability.
Currently, both South Korea and the U.S. need to complete further negotiations and related review procedures. The signing and official announcement of the bilateral Memorandum of Understanding (MOU) have not been determined.
(Adapted from a report by Reuters)