Reuters reported that Trump said Taiwan agreed to purchase 30% of the natural gas in the Alaska pipeline. (Reuters)
[Financial Channel/Comprehensive Report] U.S. President Trump said that Taiwan has agreed to purchase 30% of the natural gas in the Alaska LNG Pipeline Project in the next 20 years, and vigorously promoted this measure before the mid-term elections; in addition, Taiwan will invest an additional US$4.4 billion (approximately NT$139.92 billion) to ensure that the project is eventually completed.
But "Bloomberg" pointed out that although there are still doubts about whether the pipeline can eventually be built, Trump praised these promises at a campaign event in California on Tuesday, saying that it "guaranteed" the success of the project. In this regard, Reuters also recently revealed that the unit construction cost of the Alaska LNG project may be twice as high as that of similar facilities on the U.S. Gulf Coast.
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According to reports, Taiwan’s PetroChina has previously signed a letter of intent for LNG purchase and investment with the Alaska Natural Gas Development Agency. However, the specific purchase price, investment conditions and contract details announced by Trump have not yet been made public, and the relevant commitments have not yet been officially confirmed by Taiwan.
Alaska Public Media pointed out that Alaska government officials have been working on building this 807-mile (1,298 kilometers) oil pipeline for decades. They say the pipeline will increase state revenue and provide low-cost energy to Alaska residents. But so far they have been unable to secure clear price commitments from natural gas buyers that would support the project's huge costs.
It is reported that the natural gas pipeline planned to be built by Alaska LNG is mainly intended to transport natural gas from the North Slope of Alaska to the southern liquefaction facilities and then export it to the Asian market. It is expected to produce 20 million tons of LNG per year.
However, according to a Reuters report on October 1, developer Glenfarne Group estimates that the overall project cost is as high as US$44.5 billion to US$54.5 billion, which translates into a construction cost of approximately US$2.2 billion to US$2.7 billion (approximately NT$69.96 billion to NT$85.86 billion) per 1 million tons of production capacity per year, which is much higher than the US$1 billion (approximately NT$31.8 billion) level of similar LNG export facilities on the U.S. Gulf Coast.
Developers believe that Alaska's proximity to Japan, South Korea and Taiwan means lower transportation costs, which will help increase competitiveness. Glenfarne said shipping costs for Alaska LNG exports to Asia could be at least 65% lower than those along the Gulf Coast.
"Alaska Public Media" reported on the 9th that Jason Feer, global business intelligence director of energy consulting firm Poten & Partners, pointed out that the real question is whether Asian buyers are willing to pay higher prices for energy supply security. Although Asian customers have signed multiple non-binding letters of intent to purchase gas, no buyer has yet been willing to sign a formal contract at a price significantly higher than the market price.
Fair believes that the Alaska LNG project is still a long way from actually starting, and there is no sign that the project is about to start at this stage.
In addition to Taiwan, Trump also recently announced that South Korea will invest US$54 billion (approximately NT$1.7 trillion) in the Alaska LNG project. However, the South Korean government immediately clarified that it has not yet decided whether to invest and must first review the commercial feasibility of the project. In this regard, "Alaska Beacon" reported that South Korea's Minister of Industry, Trade and Energy Kim Jung Kwan said that the content announced by the United States exceeded the actual consensus reached by the two sides. South Korea has only agreed to carry out relevant assessments and has not committed to a US$54 billion investment.
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