$120 billion nuclear program also being discussed under Korea's US investment pledge
South Korea is considering spending $22.3 billion on a natural gas power project in Texas, which would mark the first investment under its $350 billion commitment to the US, according to government sources Tuesday.
The project proposed for Encinal, Texas, would build a 6.3-gigawatt gas-fired power plant in Texas to meet surging electricity demand fueled by the rapid expansion of artificial intelligence data centers and advanced semiconductor facilities in the state.
The industry ministry had reported the details of the project during a closed-door consultation between the government and the ruling Democratic Party of Korea, held at the National Assembly on Monday, according to people familiar with the matter.
Park Jung-sung, South Korea’s trade minister, and officials involved in negotiations with Washington briefed lawmakers from parliamentary committees overseeing finance and industry on potential projects, investment amounts and the status of negotiations with the US.
The Encinal project has emerged as the leading candidate, which would become the first project under the $350 billion investment package pledged by Seoul last year as part of a trade deal with Washington in return for a cut in US tariffs on South Korean goods.
Its announcement could also ease concerns that Seoul’s US investment plans have been slow to get off the ground, almost a year after the two countries agreed on the investment framework last October.
Seoul is said to have initially considered investing about $19.8 billion in the project, but the US side sought to raise the amount to about $25 billion. After negotiations, the two sides narrowed their difference to around $22.3 billion. The final investment amount and capacity could still change as negotiations continue.
The project is expected to be developed in stages to reduce the risks of committing significant capital upfront. Under the proposal, developers would initially construct roughly 1.4 gigawatts of gas turbine generation capacity. From there, up to 4.9 gigawatts of more efficient combined-cycle gas generation could be added in phases, depending on electricity demand and the project's economics.
A large US nuclear power plant is also being discussed as a possible follow-up investment. Washington has proposed allocating up to $120 billion of the investment package to build up to eight large nuclear reactors in the US, according to people familiar with the talks.
The discussions include the possibility of using South Korea’s APR100 reactor design for two of the proposed units.
The proposed nuclear program would account for a bulk of the $200 billion investment pool, which is separate from the $150 billion committed to revitalizing the US shipbuilding industry. Together, the two pools make up Seoul's $350 billion US investment package.
Under a special law governing the US investment package, the government is required to brief the National Assembly before concluding negotiations, including an outline of the negotiated terms, the size of the investment and the procedures that will follow.
Monday’s closed-door meeting can therefore be seen as part of Seoul’s effort to secure parliamentary backing as negotiations with Washington enter what appears to be their final stage.
The two governments could sign a memorandum of understanding detailing the investment framework as early as Sept. 18, after completing remaining negotiations, according to sources.
The industry ministry, however, said it could not confirm details of reports on the Texas gas project because consultations between Seoul and Washington are still underway.
It added that the government would make an announcement after completing negotiations with the US and following procedures such as parliamentary approval, the ministry added.
In a separate statement, the ministry said no decision has yet been made regarding the construction of a nuclear power plant in the US.
By Ahn Sung-mi (sahn@heraldcorp.com)
