Kim Jungkwan Says U.S. Alaska Project Announcement Premature, Expresses Regret to Lutnick

Post-Investment Briefing on U.S. Projects Held at Sejong Government Complex on the 1st

"Both Countries Agree to Pursue Alaska Project Based on Commercial Viability"

Kim Jungkwan, Minister of Trade, Industry and Energy, stated on the 1st, "The U.S. side went too far by making an announcement that appeared to definitively confirm the Alaska liquefied natural gas (LNG) project as an outcome of Korea's investment in the United States. I expressed my regret about this to Secretary of Commerce Howard Lutnick."

On this day, during a briefing on U.S. investment projects at the Government Complex Sejong, Minister Kim said, "There is controversy surrounding the Alaska project, but what has been agreed between the two countries is to pursue commercial viability and follow domestic legal procedures," explaining the situation as such.

Kim Jungkwan, Minister of Trade, Industry and Energy, is giving a briefing on the US investment project at the Government Complex Sejong on the 1st. Ministry of Trade, Industry and Energy

The fact sheet on the Alaska project, jointly released by Korea and the United States, contains the following: ▲ The initiation of project review under the condition that commercial viability, as stipulated in the strategic investment memorandum of understanding, is met and all relevant domestic legal requirements are fulfilled; ▲ The United States will support the favorable involvement of Korean vendors and suppliers in the process of advancing the project; ▲ The United States guarantees purchase contracts for LNG produced from the project at economically viable prices and grants Korea priority access to LNG produced from the project.

Minister Kim emphasized, "Regarding the controversial Alaska project, what has been agreed upon with the United States is exactly what is stated as the three sentences in the joint fact sheet: The Alaska project will only be pursued on the premise of commercial viability. This is the content that has been agreed upon by the governments of Korea and the United States."

The following is a summary of the key Q&A between Minister Kim and reporters.

▲Secretary Lutnick stated unilaterally that Korea would invest more than USD 50 billion in the Alaska LNG project.

=The U.S. side is already well aware of how notorious this project is in Korea. That is why commercial viability is an extremely important value. Measures to enhance the feasibility of the project are necessary to ensure this. For example, there are commitments to take actions regarding customs duties or taxes and to facilitate Korean companies' participation to enhance the project’s feasibility. The United States has promised to take such steps, and we have expectations in this regard.

It is apparent that the U.S. wants to leverage this publicly as well. This morning, I strongly raised objections with Secretary Lutnick. In response to Korea’s concerns, he expressed understanding and said he would do his utmost to ensure the success of the project.

The scale of the project in the U.S. has changed from USD 67 billion to more than USD 50 billion. The fact that the figure dropped by more than USD 10 billion in just a few days means that this project has not yet been fully reviewed within the United States.

There is only one criterion for advancing this project: a decision will be made based on commercial viability, and if this cannot be achieved, the project will not proceed. This is specified in the joint fact sheet agreed upon by the U.S. and Korea.

▲What are the conditions for securing the commercial viability of the Alaska project?

=The United States has a strong and genuine commitment to making this project a success. Therefore, unlike other projects, there are provisions for providing incentives such as tax and tariff benefits, and for supporting the participation of Korean companies.

Until now, the biggest issue with the Alaska project has been permitting; to expedite such issues, the federal government, rather than private sector entities, has decided to oversee the project. Since the federal government can address the chronic permitting issues quickly, and if problems related to manpower can also be resolved, there is a clear expectation that the commercial feasibility of the project could improve compared to before.

Kim Jungkwan, Minister of Trade, Industry and Energy, is giving a briefing on the investment project in the United States on the 1st at the Government Complex Sejong. Ministry of Trade, Industry and Energy

▲What are the candidate sites for the Korea-U.S. nuclear power project (framework)?

=There are several possible locations mentioned, such as Ohio and Tennessee, and these regions wish to have nuclear power plants constructed. If the nuclear power project progresses concretely, we expect the U.S. side to present candidates to us. Even within the same region, there are a variety of sites. Nuclear power plants cannot simply be built on any plot of land. The bedrock must be very firm, construction risks must be minimized, and it is also crucial that a sufficient water supply can be secured nearby. We will carefully examine how these factors affect project feasibility to determine which site is optimal.

▲What procedures must be followed to build the APR1400 in the United States?

=The settlement agreement (SA) between Westinghouse, Korea Electric Power Corporation, and Korea Hydro & Nuclear Power needs to be amended, and we have decided to pursue such an amendment. There might also be some changes regarding royalties. These issues also require negotiation.

▲You mentioned implementing a 'risk pooling' mechanism based on an umbrella investment structure, but this was not included in the current fact sheet.

=These details are set out in a separate agreement with legal binding force, not in the fact sheet released today. Such safeguards are included in that agreement. In addition, the legally binding annual remittance ceiling of USD 20 billion is also included. However, this agreement involves matters relating to private sector businesses, so it is not being disclosed at this time.

▲Is there a possibility that the annual remittance ceiling of USD 20 billion could be exceeded, depending on the speed of progress for each U.S. investment project?

=The two countries have already held discussions on this issue. Regardless of project progress, the annual remittance limit has been set at USD 20 billion. The schedule for remittance will naturally be aligned with the progress of the projects. At this point, the most tangible project is the Texas project, so remittances are expected to mainly focus on the Texas project.

▲What is the current status of the Korea-U.S. shipbuilding cooperation project, the "MASGA" project, which has a total value of USD 150 billion?

=There have been discussions on the MASGA project throughout the recent U.S. investment talks, but progress has not been made on the items that require U.S. action, so we are pressing the U.S. side to move more quickly. There are issues regarding various restrictions on military vessels that the U.S. needs to relax. Once the overall U.S. investment projects are finalized, we intend to pursue the MASGA project more actively.

Since the United States currently lacks the capacity to build ships, there is a mutual understanding that the USD 150 billion will naturally be used for the construction of U.S. naval and merchant vessels in Korea.

This content was produced with the assistance of AI translation services.