Korea under pressure to invest in Louisiana LNG to lower US tariffs

Donald Trump tours the Cameron liquefied natural gas export facility in Hackberry, La., May 14, 2019. AP-Yonhap.

A U.S. request for Korea to invest in Louisiana’s liquefied natural gas (LNG) industry has emerged as a key agenda item in ongoing trade talks between the two countries.

U.S. President Donald Trump’s threat to raise tariffs on Korean goods back to 25 percent from 15 percent — the level agreed upon last November — has been attributed partly to Seoul’s rejection of that request.

The Ministry of Trade, Industry and Resources on Friday neither confirmed nor denied a report that Washington began warning of the tariff hike after Korea refused to invest in Louisiana LNG export terminals.

Citing multiple government sources, the Dong-A Ilbo reported that Seoul’s trade negotiators told their U.S. counterparts that it would be difficult to make decisions unless the National Assembly passes a bill to formalize Korea’s planned $350 billion investment in American industries.

“Please excuse us for not going into specifics about discussions on U.S. investment projects,” the ministry spokesperson said in a press statement.

The government’s working-level delegation sent to Washington on Wednesday included the acting head of the ministry’s gas division, which oversees the supply of LNG and liquefied petroleum gas.

He was reportedly dispatched to discuss potential regions where Korea could invest in the LNG industry.

Last October, the U.S. Department of Energy gave final approval to Venture Global’s CP2 LNG project in Louisiana, allowing exports to non-free trade agreement countries. The $28 billion project in Calcasieu Parish is scheduled to begin operations as early as next year.

Separately, Woodside Energy is proceeding with another LNG project in Louisiana worth $17.5 billion, aiming to complete construction of its facilities by 2029.

With the Trump administration pushing to ship Gulf Coast LNG around the world, Japan pledged to invest in gas projects in Texas and Ohio when it announced Wednesday the first set of U.S. investment plans under its $550 billion commitment.

“The Gas Power Plant in Ohio (A State I won THREE TIMES!) will be the largest in History, the LNG Facility in the Gulf of America will drive Exports, and further our Country’s Energy DOMINANCE,” Trump wrote on social media Tuesday.

In contrast, Korea has taken a cautious stance on investment in the U.S. gas sector, citing uncertain profitability.

Although POSCO plans to import LNG from Alaska and supply steel pipes for in-state gas transportation, the government has ruled out any sovereign-level investment in the project as well as any purchase of Alaskan LNG by state-run Korea Gas Corp.