Alaska LNG Project: Korea’s Choice? Analysis of Opportunities and Risks

Revival of a decades-long dormant mega project and its geopolitical ripple effects: an in-depth analysis

• Background and current status of the Alaska LNG project, stalled for decades
• Different geopolitical calculations faced by Korea and Japan amid U.S. trade pressure
• Expected scenarios of opportunities and critical risks for Korea’s participation

The decades-drifting Alaska LNG project has re-emerged at the center of the international energy market, fueled by the entry of a private developer and strong political backing. This is more than a simple energy development venture; it is a grand narrative intertwining the energy security of Korea and Japan with the geopolitical interests of the United States.

1. Alaska LNG Project: The Dawn of Revival

The Alaska LNG project has a history spanning over ten years. Initially led by major oil companies like BP and ExxonMobil, it faced a crisis when they withdrew in 2016. The Alaska state public corporation (AGDC) then took the lead but appeared stalled due to financing failures.

A decisive turning point came in March 2025, when New York-based private developer Glenfarne Group acquired a 75% stake. Glenfarne Group, with extensive experience in projects like Texas LNG, injected new momentum into the project. The strong support from the Trump administration clearly signals this is not merely a commercial venture but a national priority.

Technical Blueprint of the Project

The project consists of three main parts:

1. Gas Processing Facility: Processes natural gas in the North Slope region of northern Alaska.
2. Gas Pipeline: An 807-mile (about 1,300 km) pipeline transporting processed gas to the southern coast.
3. LNG Liquefaction Plant: An LNG export terminal with an annual capacity of 20 million tons (MTPA) to be built in Nikiski, southern Alaska.

The total estimated cost is approximately $44 billion, with the developer targeting a final investment decision (FID) for phase one of the pipeline by the end of Q4 2025.

Table 1: Alaska LNG Project - Key Indicators

2. Geopolitical Gamechanger: U.S., Japan, and Korea

The Alaska LNG project is more than a commercial attempt; it is a key tool of U.S. economic diplomacy and a geopolitical variable that probes the energy security dilemmas of East Asian allies.

U.S. Directive: The Ally Pressure Card

The Trump administration is leveraging this project as a powerful means to address trade imbalances with Japan and Korea. Linking project participation directly to avoiding high tariffs, it pressures allies. While packaging Alaska LNG as a ‘safe and stable’ alternative to Middle East and Russian supplies, it effectively demands geopolitical trade-offs.

Japan’s Strategic Calculation: An Almost Perfect Alternative?

For Japan, which imports over 90% of its energy, Alaska LNG is considered an almost perfect strategic alternative to simultaneously reduce dependence on the Middle East and Russia. Especially by lowering the risk from Russia, which supplies about 10% of its LNG, and securing a stable supply line from its closest security ally, the U.S., this aligns precisely with Japan’s national strategy.

Table 2: Japan’s 7th Basic Energy Plan - Power Generation Mix Targets for 2040

Korea’s Challenge: Choices Under Pressure

Korea’s situation is far more complex. While energy security diversification is a stated rationale, the reality is pressure to participate under coercive U.S. trade negotiations. Threats of high tariffs on key export industries like automobiles and steel turn the Alaska LNG project into a diplomatic issue critical to the nation’s economic fate, not just an energy deal.

3. Korea’s Dilemma: Between Tariff Bombardment and Stranded Asset Risk

For Korea, the Alaska LNG project presents two faces: ‘opportunity’ and ‘risk.’ The government faces a difficult balancing act amid U.S. pressure, domestic policy conflicts, and potential industrial opportunities.

Tariff Trap and Government Tightrope

The Trump administration threatens a 25% comprehensive tariff on all Korean imports to pressure project participation. In response, the Korean government and Korea Gas Corporation maintain a cautious stance, emphasizing “thorough economic feasibility review” to buy time. This caution stems from outdated cost estimates over a decade old and unresolved risks related to extreme construction conditions.

While Japan reviews the project driven by a ‘voluntary need’ to diversify energy supply, Korea is more heavily influenced by external pressure in the form of ’tariff threats’ on its major export industries. This difference may affect the autonomy each country has at the negotiation table.

Conflict with Energy Transition Policy

The biggest issue is the clash with Korea’s long-term energy policy. The ‘2050 Carbon Neutrality’ goal and the basic power supply plan foresee a sharp reduction in LNG power generation share over the long term. In this context, a large-scale 20-year LNG import contract risks undermining policy consistency and causing massive future financial losses as a ‘stranded asset.’ Stranded assets refer to assets that lose value faster than expected due to market changes, leading to write-offs or conversion to liabilities.

This is the aspect I find most concerning. Given the commitment to carbon neutrality by 2050, is a 20-year mega fossil fuel contract truly the right choice for future generations? What do you, the readers, think?

Table 3: Korea’s Long-term Basic Power Supply Plan - Power Generation Share Projections (%)

Hidden Opportunity for ‘Team Korea’

On the other hand, the project holds significant potential opportunities for Korea’s core industries. The $44 billion construction project could bring contracts worth billions of dollars to EPC companies like Samsung E&A and Hyundai Engineering & Construction, and the order of about 30 new LNG carriers could secure multi-billion-dollar contracts for the Korean shipbuilding industry. However, this raises complex issues, including criticism of ‘chaebol favoritism backed by public risk borne by the Gas Corporation.’

Comparison of Pros and Cons by Participation Scenario

If Korea participates in the project, the following advantages and disadvantages can be considered:

Checklist for Korea’s Response

In this complex situation, Korean stakeholders should consider the following strategic approaches:

1. Independent Project Feasibility Reassessment: Recalculate cost competitiveness based on current costs and Asian market arrival prices, not decade-old CAPEX.
2. Stranded Asset Risk Modeling: Quantify the financial risks of long-term contracts under the 2050 carbon neutrality scenario.
3. Negotiation Agenda Separation Strategy: Separate LNG purchase contracts from tariff negotiations to diplomatically escape excessive U.S. political pressure.
4. Contract Flexibility Securing: If negotiating, minimize unfavorable clauses such as strict take-or-pay terms and allow third-party resale options.

Conclusion

Korea’s position regarding the Alaska LNG project can be summed up as a ‘dilemma.’ Key points are:

• Geopolitical Game: The Alaska LNG project is a geopolitical issue where U.S. foreign policy and the national strategies of Korea and Japan collide, beyond a mere energy business.
• Coexistence of Opportunity and Risk: Korea faces opportunities to enhance energy security and secure contracts for shipbuilding and construction industries, but also serious risks from U.S. trade pressure and conflicts with carbon neutrality policies.
• Need for Cautious Strategy: Rather than hasty decisions, maintaining ‘strategic ambiguity’ with thorough due diligence and multifaceted negotiation strategies based on national interest is essential to minimize risks and maximize benefits.

In the midst of this massive energy geopolitical whirlwind, a careful and strategic approach is more important than ever for Korea to find the optimal solution. Continuous monitoring of government and related corporate policy decisions is necessary.