Countdown Begins for First U.S. Investment Project

South Korea to Invest $200 Billion to Start Energy Projects Like LNG and Nuclear Power Take Center Stage

The Sabine Pass LNG Terminal, the largest LNG terminal in the United States.

With the Special Act on U.S. Investment (Special Act for Korea-U.S. Strategic Investment Management) clearing the National Assembly hurdle on March 12, the government has managed to catch its breath for now. Assessments indicate that this has somewhat reduced the justification for the United States to impose additional tariffs on grounds of unfulfilled promises.

Simultaneously, the announcement of the ‘First U.S. Investment Project’ has entered countdown. Of the total U.S. investment package worth approximately $350 billion, about $200 billion will be committed to this project, which is considered a strategic card that goes beyond simple capital investment to solidify future Korea-U.S. economic cooperation. Amid intensifying tariff pressure from the Trump administration, the government’s plan is to leverage energy cooperation cards such as LNG and nuclear power to secure both national interests and commercial viability.

According to industry sources, the most promising candidates for the first U.S. investment project currently include energy-related businesses such as liquefied natural gas (LNG), nuclear power, and electricity. This reflects comprehensive consideration of surging energy demand within the United States, the necessity of expanding imports of U.S.-produced energy including LNG, and the potential for domestic companies to participate in such projects. The government is reportedly conducting reviews centered on energy projects capable of simultaneously capturing two objectives: national interests and commercial rationality. Given that project announcements are to be made at an appropriate time following consultations with the United States after the passage of the special act, some suggest the possibility that the first project could be unveiled as early as this month.

Initially, the government opted for a pace-control approach to avoid losing initiative in the U.S. investment push. This was because, in a situation where the legality of the Trump administration’s reciprocal tariff measures had not yet been adjudicated, tariff negotiations and the scale of U.S. investment could be affected depending on such rulings. There was also a judgment that it would be more advantageous to national interests to observe the investment movements of other countries such as Japan and Taiwan before making decisions, rather than hastily finalizing the first project. The fact that procedural preparatory stages remained, including passage of the Special Act on U.S. Investment and establishment of the Korea-U.S. Strategic Investment Corporation, was another reason for the cautious approach to investment project selection.

However, the atmosphere shifted when the Trump administration announced its intention to raise reciprocal tariffs on Korea from 15% to 25% in January. On January 26 (local time), President Donald Trump posted on his social networking service (SNS), “The National Assembly of the Republic of Korea has not enacted our historic trade agreement into law,” and notified an increase in reciprocal tariffs on Korean automobiles, lumber, pharmaceuticals, and other goods from the existing 15% to 25%. Furthermore, with Japan unveiling its first U.S. investment project in February, Korea also began accelerating work on selecting its first project.

Currently, the most promising investment candidate is the Louisiana LNG export terminal construction project, which originated from a U.S. proposal. Louisiana is home to the Sabine Pass LNG Terminal, the largest LNG terminal in the United States, and serves as a key hub for exporting LNG produced in the southeastern United States. According to the Wall Street Journal (WSJ), approximately 60% of U.S. LNG export volume in 2024 was supplied to Europe and Asia through Louisiana terminals. However, with new LNG export terminal investments significantly delayed recently due to rising construction costs and permitting issues, the U.S. government is presumed to have requested Korea’s investment participation.

The government has also commenced feasibility reviews for the terminal construction project, including confirming investment intentions from LNG-related companies. There is an atmosphere of discussions regarding plans to invest approximately $10 billion through the Korea-U.S. Strategic Investment Fund, with domestic companies participating in the construction process to secure revenues. The strategy is for both countries to achieve a ‘win-win’ outcome through a model where domestic steel companies supply related equipment and materials, while LNG carriers traveling to and from the terminal are ordered and constructed by domestic shipbuilders.

The LNG terminal project is assessed as a realistic option for Korea, a non-oil-producing country, in that it can diversify LNG import sources. Currently, Korea relies on the Middle East for approximately 19.7% of its natural gas imports, leaving it constantly exposed to domestic and international uncertainties. Analysis suggests that U.S.-produced LNG is the most viable alternative for concluding long-term supply contracts at relatively low prices. Choi Jin-young, a researcher at Daishin Securities, stated, “When Qatar faces force majeure situations related to LNG exports as is the case now, U.S.-produced LNG is the only alternative that can substitute for it,” and assessed that “Asian countries that have experienced energy crises will inevitably seek U.S.-produced LNG.”

Nuclear power plant construction as part of MANUGA (Make American Nuclear Great Again) is also identified as a promising U.S. investment candidate. At the plenary session of the National Assembly’s Trade, Industry, Energy, SMEs and Startups Committee on March 9, Minister of Trade, Industry and Energy Kim Jung-kwan indicated the possibility of nuclear power project investment regarding U.S. nuclear investment, stating, “While specific details cannot be disclosed at this time, related discussions are being conducted seriously.”

The United States is currently pursuing plans to commence construction of 10 large-scale nuclear power plants by 2030. However, while nuclear plant design technology (Westinghouse) has been secured, construction capabilities have been substantially weakened as no new nuclear plants have been built in over 30 years. This is the background for analysis suggesting that cooperation with Korean companies, which possess the world’s best ‘On Time On Budget’ capabilities, is inevitable. For domestic companies as well, this could represent a strategic opportunity to enter the U.S. market, which is considered the largest future market for both large-scale nuclear plants and small modular reactors (SMRs).

Additionally, investment in power grids (transmission and distribution networks) for stable supply of electricity generated from nuclear plants is also mentioned as a candidate project that can satisfy the needs of both countries. The United States projects that electricity consumption will more than double by 2030 due to expansion of the artificial intelligence (AI) industry, among other factors. However, much of the transmission and distribution infrastructure that actually delivers electricity has already exceeded its design lifespan. Domestic power equipment companies, which have demonstrated global technological capabilities in the power grid business and possess production facilities within the United States, are expected to benefit considerably.

The government’s position is to keep possibilities open in multiple directions and continue reviews until the announcement of the first project. An official from the Ministry of Trade, Industry and Energy stated, “As the final decision must undergo review by the U.S. investment committee, it is difficult to predict which project will be finalized,” and conveyed that “specific details such as the project selection process and investment plans will be disclosed in accordance with procedures under the Special Act on U.S. Investment.”

Meanwhile, Japan, which finalized its first U.S. investment project ahead of Korea, is already concretizing its blueprint for subsequent investment projects. According to Japan’s Nikkei Shimbun, Kyodo News, and Yomiuri Shimbun, the Japanese government is reviewing SMR construction, copper refining facilities, and display and LCD manufacturing as its second U.S. investment project. The Japanese government is expected to announce subsequent projects at the U.S.-Japan summit scheduled for March 19.

Jung Min-hee

pr@businesskorea.co.kr

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