Alaskan LNG project participation may be nonstarter with Kogas in the red

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Alaskan LNG project participation may be nonstarter with Kogas in the red

Published: 14 Apr. 2025, 17:47

Audio report: written by reporters, read by AI

U.S. President Donald Trump speaks as he signs executive orders and proclamations in the Oval Office at the White House in Washington on April 9. [REUTERS/YONHAP]

With Korea's participation in a liquefied natural gas (LNG) project in Alaska a key bargaining chip in negotiations with the United States, one sticking point is whether the Korea Gas Corp. (Kogas) can even buy a seat at the table after years of financial battering.

Should Seoul move forward with the investment, the state-run energy company is expected to take a leading role. However, Kogas’s financial condition may not be strong enough to support such a large investment.

As of the end of last year, the company’s unpaid charges for city gas services stood at 14 trillion won ($9.55 billion), up 1 trillion won from the previous year. Its total debt reached 47 trillion won, and its debt ratio exceeded 400 percent.

Years of supplying gas below cost have taken a toll on the company’s balance sheet. Without substantial government backing, participation in the Alaska project would be difficult. Yet with a significant revenue shortfall, government support may also be limited.

One possible alternative would be for Kogas to form a consortium with private-sector companies.

But Kang Chun-ku, an adjunct professor in the Department of Energy Resources Engineering at Inha University, said that private companies at home and abroad “view the Alaska project as highly risky, which could complicate matters.”

Major global energy firms such as U.S. energy giant Exxon Mobil have already backed out after considering investment.

The initiative would have two main components: infrastructure construction — including a gas-processing plant, pipelines and liquefaction facilities — and LNG procurement. The infrastructure component, expected to cost $44 billion, is considered the centerpiece of the project. Given the harsh climate conditions in Alaska, the actual cost could rise even further.

Oh Seong-ik, director general at the Ministry of Land, Infrastructure and Transport and vice chair of the Organisation for Economic Cooperation and Development's Territorial Development Policy Committee, warned that “this project could place a significant financial burden on the public,” stressing the need for thorough consultation with the National Assembly and other stakeholders before making any investment decisions.

“If avoiding the Alaska project is not feasible, Korea should consider partnering with countries like Japan or Taiwan to share the risks,” said Oh.

“We talked about their tremendous and unsustainable Surplus, Tariffs, Shipbuilding, large scale purchase of U.S. LNG, their joint venture in an Alaska Pipeline, and payment for the big time Military Protection we provide to South Korea,” said Trump on social media platform Truth Social shortly after the call.

“We will put both Alaska LNG and shipbuilding on the negotiation table for thorough discussions,” said Cheong In-kyo, deputy minister for trade negotiations at the Ministry of Trade, Industry and Energy, who is currently visiting the United States for tariff talks.

This represents a shift from the government’s previously cautious stance.

Cheong said on March 14 that “there doesn’t appear to be sufficient information about the project," while Trade Minister Ahn Duk-geun said, “We are looking into the project through various channels, but it’s too early to make predictions” on March 20.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY KIM MIN-JOONG [[email protected]]