Japan and Big Oil Pulled Out, But What About the Commercial Viability of 'Project North'?

[Anchor]

The Alaska LNG project, which U.S. President Trump has definitively pushed forward, was previously entered and subsequently abandoned by major global oil companies. This is because, while it requires massive costs, question marks remain over its profitability.

Reporter Kwon Ran examines whether there is any real practical benefit for us to jump into it now.

[Reporter]

The Alaska LNG project, designated as "Project North" by South Korea and the United States.

It is a project to bring natural gas from northern gas fields through a 1,300-kilometer pipeline to the southern coast, liquefy it, and export it to countries such as South Korea and Japan.

It is an ultra-large-scale project estimated to cost between 60 trillion and 74 trillion won in total project expenses, with a target production of 20 million tons annually.

Compared to LNG terminals along the U.S. Gulf Coast, the transportation distance to major East Asian consumer countries is shorter, which can significantly reduce time and costs.

However, the Alaska LNG development has drifted for a long time due to massive construction costs, poor construction conditions caused by extreme weather, and profitability controversies.

In 2014, global oil companies such as ExxonMobil, ConocoPhillips, and BP jumped in, and it seemed to take off in earnest, but they ultimately withdrew citing project costs and economic feasibility.

Afterward, U.S. President Trump returned to the White House and re-pushed the project, putting pressure on South Korea and Japan, which had announced plans for investment in the U.S., by singling them out to participate.

Japan considered investing 44 billion dollars in the Alaska project last year, but did not include it in its actual U.S. investment projects.

The South Korean government's decision to limit its involvement to the review stage also took into account the pile of challenges, such as project costs potentially increasing much more than expected and the need to find additional LNG buyers.

Regarding President Trump's unilateral announcement that investment has been finalized, the government drew a line, stating, "Nothing has been decided regarding investment."

[Kim Jung-kwan / Minister of Trade, Industry and Energy : I would like to mention that we expressed regret to Commerce Secretary Lutnick regarding matters that went beyond what was agreed upon.]

However, as the U.S. government shows strong determination for the Alaska LNG project, room remains for commercial viability to improve.

[Yoo Seung-hoon / Professor, Department of Future Energy Convergence, Seoul National University : Right now, there is no commercial viability. If we negotiate well with the U.S. to reduce various tariffs and taxes while receiving support from the U.S. government, we can secure commercial viability.]

As variables such as massive costs and shifts in the U.S. administration are scattered throughout, the government repeatedly emphasized its stance that it will pursue the project only if commercial rationality is confirmed.

(Video by Park Ji-in, Design by Cho Soo-in)
※ Please note: This article was translated by AI and may contain errors.