Korea to include Alaska LNG in US investment MOU without committing funds

The South Korean government has decided, at the strong request of the United States, to include the Alaska liquefied natural gas (LNG) project in a memorandum of understanding (MOU) related to Korean investment in the United States. However, Seoul is not committing to an investment and is instead coordinating language stating only that it will review and explore the possibility of investing.
According to government and industry sources on Sept. 15, the South Korean and U.S. governments have agreed to include wording in the MOU, which could be signed as early as Sept. 18, stating that they will “explore the possibility” of investment in the Alaska LNG project.
An M&A lawyer at a major law firm said, “The expression ‘explore the possibility of investment’ is essentially loose language with no legal binding force. There would be no legal liability even if the government later decided not to proceed with the investment.”
The Alaska LNG project is a large-scale energy infrastructure project aimed at constructing a pipeline to transport natural gas produced in northern Alaska to the southern part of the state. The project also includes the construction of gas treatment facilities and an export terminal as part of an integrated package. The total cost of the project has been estimated at around $67 billion, or approximately 91 trillion won.
The United States is reported to have strongly pressed South Korea to direct some of its planned U.S. investment toward the Alaska LNG project. The move is seen as intended to support Republican electoral prospects in Alaska ahead of the November midterm elections. President Donald Trump has repeatedly mentioned in public the possibility of South Korean participation in the Alaska LNG project.
The South Korean government, however, remains cautious about the project’s commercial viability. Taking construction costs and other expenses into account, Alaska LNG may have difficulty achieving a price advantage over LNG produced along the U.S. Gulf Coast.
Kim Jung-kwan, minister of trade, industry and energy, told the National Assembly last November that the Alaska LNG project was “a high-risk project.”