Washington: South Korea has committed to purchasing $100 billion worth of liquefied natural gas (LNG) and other energy products from the United States over the next four years under a newly established tariff deal. This agreement was announced by the administration of U.S. President Donald Trump.
According to Yonhap News Agency, the deal excludes the purchase of Alaskan LNG or involvement in the gas pipeline development project in Alaska, as clarified by the Korean government. This energy purchase plan is part of a tariff agreement where the U.S. agreed to reduce its proposed reciprocal tariffs on South Korea from 25 percent to 15 percent. In exchange, South Korea pledged substantial investments and market openings.
South Korea's investment includes a $350 billion commitment to the U.S., with $150 billion allocated for bilateral shipbuilding cooperation and another $200 billion earmarked for investments in advanced sectors such as semiconductors, batteries, and biopharmaceuticals. Kim Yong-beom, the presidential chief of staff for policy, stated that the $100 billion energy purchase is manageable and aligns with the country's energy needs. This adjustment may involve shifting from Middle Eastern energy sources to American ones.
Under this plan, South Korea is expected to import $25 billion worth of energy from the U.S. annually during President Trump's term. In the previous year, South Korea imported $17.3 billion worth of American oil and natural gas, accounting for 15.7 percent and 12.2 percent of Korea's total imports, respectively.
The state-run Korea Gas Corp. is positioned to expand its gas imports from the U.S. as its long-term contracts for importing LNG from Qatar and Oman expire later this year. The Korea National Oil Corp. is also considering replacing part of its strategic oil reserves with American light crude oil.
Trade Minister Yeo Han-koo clarified in a separate briefing in Washington that the trade agreement does not include South Korea's potential involvement in the Alaskan LNG project. However, Yeo mentioned that the Seoul government has requested data on the project's economic feasibility to consider future participation.
President Trump has expressed interest in having Seoul and Tokyo participate in the $44 billion Alaskan LNG project, which includes constructing a 1,300-kilometer pipeline. Last week, foreign media reported that Japan agreed to form a joint venture for this project as part of its trade deal with the U.S.