Taiwan Plans to Invest $4.4B in Alaska LNG, Subject to Negotiations
On Wednesday, Taiwan's government confirmed that it currently plans to buy six million tonnes per annum of LNG from the Alaska LNG megaproject, and it intends to make a $4.4 billion investment in the construction of the system, subject to further negotiations.
In a statement on his social media platform on Wednesday, President Donald Trump confirmed that Taiwan had agreed to an "offtake commitment" equaling 30 percent of the plant's output "because this is now a U.S. federal government project." New York-based investment company Glenfarne Group and the state-owned Alaska Gasline Development Corporation are the project's sole owners, holding equity stakes of 75 percent and 25 percent respectively.
Taiwan's energy ministry couched its commitment in terms of an ongoing negotiating process, pledging "an estimated maximum" investment amount only after further study and budgeting. "Specific investment arrangements, shareholding ratios, and related conditions will be handled according to subsequent negotiations and commercial contract procedures," the ministry said.
Alaska LNG is a longstanding proposal for an infrastructure network to pipe abundant North Slope gas resources across the state to Cook Inlet for liquefaction and export. It would require construction of an 800-mile line connecting gas fields on the Artic tundra to an LNG plant rated at 20 million tonnes per annum.
At one time, Alaska LNG had support from BP, ExxonMobil and ConocoPhillips and was advancing steadily as a private-sector venture. All three oil majors backed out in 2016 following an independent assessment of the project's economics. At present, a New York-based investment company and the state-owned Alaska Gasline Development Corporation own the equity in Alaska LNG.
With the need to construct a $9 billion gas treatment plant at the Arctic northern side, then build an 800-mile overland supply pipeline through rugged wilderness, the megaproject is expected to cost $45-55 billion for 20 mtpa of capacity. This works out to as much as $2.7 billion per mtpa, much higher than the $1.6 billion per mtpa capex cost for the LNG Canada Phase 2 project in Kitimat, British Columbia. About 900 nautical miles apart, the two sites are natural competitors: they target the same East Asian market, and at similar scale. Two weeks ago, LNG Canada got the green light from private investors for its $23 billion Phase 2 expansion, which will double its capacity to 28 mtpa.
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The Trump administration has been asking Asian allies to make comparable investments in Alaska LNG, and President Donald Trump announced a $50 billion South Korean commitment to the project last week. South Korea's energy ministry responded that a complete commercial feasibility study would have to be done before any final investment decision.
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