Washington's tariff pressure is pushing South Korea toward Alaska LNG, but Seoul's conditional review falls well short of financing the up to $54 billion project. Alaska's remote geography and construction costs undercut its shipping-time advantage, while weakening Korean gas demand and competing Canadian supply narrow the case for investing.
President Donald Trump's tariff threats have turned Alaska LNG, discussed for decades, into a live bargaining chip with South Korea. In September, Trump said South Korea would pay more than $50 billion toward Alaska LNG, at an event attended by Alaska officials and Glenfarne CEO Brendan Duval. Yet on October 1, Seoul listed the project as under review, conditional on meeting commercial and legal requirements — well short of Trump's figure.
Tariff pressure drives the talks
Washington had threatened 25% tariffs on Korean exports, a rate it lowered to 15% in exchange for $350 billion in investments and $100 billion in US energy purchases. South Korea's parliament passed enabling legislation in March 2026, with talks moving to specific projects in September. Seoul's October 1 package also included a 6.47 GW gas-fired power project in Texas serving AI data centres from 2029, and eight US nuclear reactors costing $120 billion combined.
A project built on cost
The $45 billion–$54 billion development, owned 75% by Glenfarne and 25% by the state of Alaska, needs a roughly 1,300-kilometre (807-mile) pipeline built before any export revenue arrives. About 54% of that pipeline can only be built in summer, as shifting permafrost and mountain crossings reaching 1.5 km narrow the window. Capital intensity approaches $2.7 billion per million tonnes of annual capacity, against $898 million per tonne for Qatar's North Field East and $762 million per tonne for Cheniere's Corpus Christi Stage 3.
Buyers without financing
Japan's role has already narrowed. Trump said in July 2025 that Japan would form an Alaska LNG joint venture under its $550 billion US investment vehicle, but the project later dropped off Tokyo's list. Instead, Japan's involvement centres on a Jera and Tokyo Gas letter of intent to buy 1 million tonnes annually for 20 years. Korea's Posco International has signed a similar non-binding deal for the same volume plus pipeline steel supply, while Taiwan, Thailand and TotalEnergies have shown buying interest without committing to construction financing.
Weakening demand undercuts the case
South Korea's annual LNG demand of 47.8 million tonnes dwarfs Posco's proposed purchase. Yet its gas-fired power generation fell 9% year-over-year to an average 13 GWh over the summer. Over the same period, coal usage rose 18% in 2026 to date. Seoul can already reach Pacific natural gas supply without financing Alaska's pipeline: LNG Canada, backed partly by Korea's own KOGAS, began exports in July 2025 and is expanding to 28 million tonnes a year after approval last month. South Korea's trade and industry minister called Alaska LNG high risk and unviable last year, a judgment tariff pressure has made harder to repeat but has not resolved.
Trump has signalled Korean investment into an unspecified $8.4 billion enhanced oil recovery project, a possible alternative that would let Seoul show cooperation while limiting its exposure to Alaska LNG's economics.
Source: Oilprice.com
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