Korea Picks $22B Gas Project as First in USA Trade Deal

South Korea has identified a gas-fired power project in Texas as the first US investment under a trade deal agreed last year, local media reported, a step that could help ease tensions between the two allies after months of friction over the pace of progress related to Seoul’s commitments.

The project in Encinal, Texas, with an investment of around $22 billion, would have a total capacity of 6.3 gigawatts and would start with 1.4 GW of gas-turbine generation before adding 4.9 GW of combined-cycle capacity, Yonhap News and other Korean media outlets reported. It would help meet surging electricity demand from artificial-intelligence data centers. 

The South Korean government has refrained from disclosing details of projects and said on Monday it won’t announce anything until it finishes a process that includes reporting to the National Assembly. Media reports said the administration will brief parliament on the investment negotiations on Sept. 17 and may sign an MOU as soon as Sept. 18.

The expected signing of the deal comes nearly a year after the two countries struck an initial trade deal that set US tariffs on South Korean exports at 15%. Seoul pledged to invest $350 billion in the US as part of the agreement, but delays in identifying the first project drew criticism from President Donald Trump, who threatened to raise tariffs on Korean goods to as high as 25%.

In the short term, the project could be “something tangible” to diffuse a point of tension in the alliance by eliminating one of the Trump administration’s talking points, said Mason Richey, a professor of international relations at Hankuk University of Foreign Studies.

The selection marks an important step toward turning Seoul’s headline investment pledge into actual projects and could therefore remove a persistent source of friction with Washington. But won’t result in larger structural changes and Trump will “come back for another bite of the apple,” Richey added.

In a last-minute twist, the US had asked South Korea to submit investment projects whose combined value exceeds the previously agreed $350 billion, Yonhap reported, citing unidentified parliamentary officials. Seoul is in talks with the US to ensure its actual commitment doesn’t exceed $350 billion, the report added.

South Korea denied that part of the Yonhap report.

“It is not true that the US side has requested investments exceeding $350 billion,” South Korea’s Industry Ministry said in a statement late Tuesday. “Under the strategic investment MOU, total investment in the US will not exceed $200 billion under any circumstances, and the annual remittance limit will not exceed $20 billion.” 

It added that the scale and timing of the initial remittance have not been confirmed.

Other investment proposals South Korea is considering include eight large nuclear reactors and an Alaska LNG project, Yonhap added.

South Korea’s investment pledge mirrors a similar commitment by neighboring Japan to avert higher US tariffs, though Tokyo has moved more quickly to put its $550 billion plan into action. Japan’s first batch of projects envisages $36 billion of investment in US oil, gas and critical-minerals projects, including a natural gas facility in Ohio.

A second group calls for $73 billion in investment in a nuclear power project spanning Tennessee and Alabama and natural gas power plants in Pennsylvania and Texas.

The Industry Ministry statement said that while South Korea and the US are engaged in various discussions regarding cooperation on nuclear power plant investments, no specific details have been determined.

South Korea’s parliament approved special legislation in March to implement the US investment commitment, hours after the Trump administration sought new legal grounds to impose tariffs on Seoul.