Photo source: President Lee Jae-myung’s SNS/ News 1
The Korean government selected the construction of a gas power plant in Texas as its first project among the $200 billion strategic investment agreed upon with the United States.
The construction of a nuclear power plant in the United States and the Alaska liquefied natural gas (LNG) development project are also being considered as investment targets, but negotiations are continuing over specific conditions.
Minister of Trade, Industry and Energy Kim Jeong-gwan attended the general meeting of the National Assembly's Trade, Industry, Energy, Small and Medium Venture Business Committee on the 22nd and reported on the progress of investment negotiations with the United States and future plans.
Minister Kim announced that he would report on plans for one project the government has decided to pursue and two projects whose implementation has not yet been confirmed.
This announcement is noteworthy in that it is the first time a specific investment project has been decided since the trade and investment agreement between the leaders of Korea and the United States in October last year.
The first investment project was the Texas gas power plant.
The project selected this time is to build a gas combined cycle power plant in Encinal, Texas, USA. The total project cost is reported to be $22.3 billion.
Recently, as semiconductor factories and artificial intelligence (AI) data centers are being built one after another in Texas, demand for electricity is rapidly increasing.
This power plant is designed to respond to this demand for electricity, and the total power generation capacity is approximately 6.3 gigawatts (GW).
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First, a 1.4GW gas turbine power plant will be built to confirm actual power demand and economic feasibility, and then a plan to gradually increase the remaining 4.9GW combined cycle power plant facilities will be promoted.
The government is said to have reported to the National Assembly the results of a business feasibility study showing that the investment principal and interest can be recovered by generating approximately $43.3 billion to $45.4 billion over the next 20 years.
However, as the business is still in the development stage, there were concerns that it remains to be seen whether actual profits can be made.
Kim Seong-won, chairman of the National Assembly's Industry and Energy Committee, met with reporters after the meeting and said that the government judged that the project had commercial rationality, but said, "Because it is in the development stage, there were concerns about other variables in the process, so I thought we had to pay attention to commercial stability."
Additional negotiations for nuclear power plant and Alaska projects
As follow-up investment targets, the construction of eight large nuclear power plants in the United States and the Alaska LNG development project are being considered.
However, unlike the Texas power plant, the specific investment conditions and implementation of the two projects have not yet been confirmed.
In particular, in the nuclear power plant construction project, the major issues are how much of the stake Korea can secure in the American nuclear power company Westinghouse and which reactor to build.
In a report to the National Assembly on this day, Minister Kim reportedly announced that he was negotiating with the U.S. with the goal of securing a 5-10% stake in Westinghouse.
The Korean government is reportedly pursuing a plan to construct six of the eight nuclear power plants to be built in the United States with Westinghouse's AP1000 model and the remaining two with the APR1400 model developed by Korea, but an agreement has not yet been reached.
The Alaska LNG development project also remains subject to additional discussions.
This project aims to transport natural gas produced from gas fields in northern Alaska to Nikiski in the south through a pipeline about 1,300 km long and then export it to Asian countries, including Korea. The total project cost is 44 billion dollars.
The Korean government has previously reviewed the feasibility of the business by dispatching an inspection team to the site, but the two countries have not yet reached a final agreement on participation in the project.
Kim Seong-won, chairman of the Industrial Resources Committee, explained that among the three projects reported to the National Assembly on this day, only one, the Texas power plant, has been decided to pursue investment, and that separate procedures must be followed for the other two.
Investment in the U.S. began with Trump tariff negotiations
This investment in the United States originated from tariff negotiations concluded between Korea and the United States last year.
President Lee Jae-myung and U.S. President Donald Trump held follow-up discussions on tariff negotiations at the Asia-Pacific Economic Cooperation (APEC) summit held in Gyeongju in October last year.
At that time, Korea promised a total investment package of $350 billion to the United States on the condition of a reduction in U.S. tariffs. Of this, $150 billion was allocated to shipbuilding industry cooperation, and the remaining $200 billion was allocated to strategic industrial investment.
The National Assembly passed the Special Act on Investment in the United States last March, establishing the legal basis for investment.
However, in the process of selecting a specific investment project, discussions continued over the possibility of investment recovery and business risks.
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The Korean government has been promoting so-called 'commercial rationality', which requires investment in economically feasible projects, as a negotiation principle.
At a press conference held at the Blue House on the 18th, President Lee also said regarding investment negotiations with the United States, "We are debating fiercely to design a project that will be helpful to both countries."
At the same time, he explained that the expression 'commercial rationality' included in the agreement at the request of the Korean side became a problem again during the process of discussing specific projects.
Minister Kim also emphasized this principle at the National Assembly on the 22nd.
He said, “So far, the government has actively identified projects that could be helpful to us and consulted with the U.S., and the projects proposed by the U.S. have been carefully examined with consistent principles of commercial rationality.”
He continued, “It was necessary to approach the investment in the United States from a national interest perspective so that it would go beyond simple investment and recovery of funds and become an opportunity to expand our company’s entry into the U.S. market and further establish a foundation for entry into the global market.”
The government reaffirmed the principle that the actual investment scale will not exceed the agreed upon total of $200 billion, and that the annual investment amount will not exceed $20 billion.
Meanwhile, the report to the National Assembly on this day was conducted privately as it included sensitive information such as discussions between Korea and the United States and specific investment conditions.
The government was originally scheduled to report the investment plan to the National Assembly on the 17th, but the schedule was postponed.
It is reported that the date of signing the memorandum of understanding (MOU) for the first investment project has not yet been confirmed.
