South Korea and the US on Thursday unveiled the first initiatives under Seoul’s $200 billion investment commitment, led by a confirmed Texas gas-fired power project.

A proposed eight-reactor nuclear program still requires approval, while participation in an Alaska liquefied natural gas project remains under review.

The distinction emerged after US President Donald Trump presented all three as firm commitments. South Korean Industry Minister Kim Jung-kwan stressed that the nuclear and Alaska proposals would proceed only after commercial assessments and further negotiations.

The commitment forms part of Seoul’s broader $350 billion US investment package agreed to alongside last year’s bilateral trade deal, under which Washington lowered tariffs on most Korean goods to 15 percent.

Trump called the initiatives “one of the largest energy infrastructure investments in American history,” saying they would strengthen energy security and bilateral ties.

Kim offered a more qualified assessment, particularly on Alaska.

“We will assess the Alaska project based on its commercial viability, and we will not proceed if it is not viable,” he said. “That is clearly stated in the joint fact sheet agreed by South Korea and the US.”

Seoul transferred its first payment of $2.4 billion under the investment program Thursday following Trump’s announcement, according to a senior government official.

The first approved investment, Project Star, is a $22.3 billion gas-fired power complex in Encinal, Texas, designed to supply nearby artificial intelligence data centers.

The 6,472-megawatt facility is expected to begin commercial operations in phases from 2029, with full operations scheduled for 2032.

US property developer Related Companies and power producer NextEra Energy will lead the project. Texas-based Lewis Energy Group will provide the site, natural gas, water and supporting infrastructure.

Kim said the developers’ track records, rising electricity demand and interest from prospective data center customers supported the project’s investment case.

Korean companies are expected to seek equipment, engineering, construction and maintenance contracts, gaining a foothold in a US gas-power market where they have had limited direct involvement.

The project has cleared the required committee reviews and has been reported to the National Assembly. Kim said government calculations pointed to nominal proceeds exceeding twice the original investment over the recovery period — sufficient to cover principal and compound interest.

Project Power, the second initiative, could allocate up to $120 billion to eight large nuclear reactors: two Korean-designed APR1400 units and six Westinghouse AP1000s.

The proposed rollout would begin with two AP1000s, followed by two APR1400s and two additional AP1000s. The final stage would add another two AP1000s.

The two governments, Westinghouse, Korea Electric Power Corp. and Korea Hydro & Nuclear Power are expected to sign a framework agreement. It would not authorize construction of all eight reactors.

Sites, ownership structures and schedules remain undecided, although US officials identified Ohio and Tennessee as possible locations. Each project would require a separate commercial assessment and Korean approval.

If built, the APR1400 units would be the first Korean-designed commercial reactors in the US. Kim said the negotiations had opened a path into a market previously restricted under a settlement between Westinghouse and the Korean companies.

Korean builders and equipment-makers would also participate in the AP1000 projects.

“Westinghouse has reactor designs and intellectual property, but it needs engineering, construction and equipment suppliers to put them into operation,” Kim said. "Korea is a strong option."

The proposed funding comprises about $100 billion for construction and $20 billion in contingency reserves. Investment would be capped at $30 billion per pair of reactors, including $5 billion in reserves.

The countries also agreed to cooperate on an advance payment of up to $10 billion by year-end for components with long manufacturing lead times. That payment would remain subject to commercial review and Korean legal and parliamentary procedures.

Separately, Korean investors, including private companies, Kepco and KHNP, will pursue a combined stake of at least 5 percent but below 10 percent in Westinghouse. Pricing and other terms remain under negotiation.

Project North concerns possible Korean participation in an Alaska LNG development linking North Slope gas fields to a liquefaction and export terminal in Nikiski through a 1,250-kilometer pipeline.

Trump said the pipeline could transport nearly 4 billion cubic feet — roughly 110,000 cubic meters — of gas daily, while US Commerce Secretary Howard Lutnick put investment in the project at more than $50 billion.

Seoul said no detailed investment amount had been agreed upon or included in the joint fact sheet. Kim said he raised concerns with Lutnick about US statements that went beyond the agreement.

Despite doubts about the project’s economics, Kim said Korea had strategic reasons to consider it.

“It is true that the project has a weaker commercial case,” he said. “But from a strategic perspective, we need to examine it because South Korea’s gas supply routes are highly vulnerable.”

He cited risks along major shipping routes, including the Strait of Hormuz, the Strait of Malacca, the Taiwan Strait and the Panama Canal, as well as uncertainty over Australian and Russian supplies.

If Korea participates, Washington has offered tariff reductions on materials such as steel, favorable conditions for Korean suppliers, commercially viable long-term purchase terms and priority access to LNG. Costs, timing and the investment structure remain unresolved.

The three initiatives are expected to absorb most of the $200 billion commitment if they proceed. An umbrella special-purpose company would manage the portfolio, with separate subsidiaries overseeing each project.

Korea and the US would split returns equally until Seoul recovers its total principal plus specified interest. Subsequent returns would be divided 10 percent to Korea and 90 percent to the US.

Kim said pooling returns would allow stronger projects to offset weaker performers. Interest on Seoul’s recoverable investment would be calculated using the yield on 20-year US Treasury bonds plus a project-specific margin.

The operating agreement would make Korea’s investment caps of $20 billion annually and $200 billion overall legally binding. Seoul would also receive financial and spending reports and retain consent rights over major changes affecting its interests.

Any remaining funds could go toward smaller strategic projects, including critical minerals or spent nuclear fuel reprocessing, Kim said.

By Jo He-rim (herim@heraldcorp.com)