▲ Industry Minister Kim Jung-kwan speaks during a plenary session at the National Assembly in Seoul on Sept. 22, 2026, to brief parliament on the first investment project under South Korea's investment commitment to the United States. (Yonhap)
▲ This illustration depicts negotiations between Seoul and Washington over Seoul's investment commitment to the United States. (Yonhap)
▲ U.S. President Donald Trump makes an announcement with Secretary of Commerce Howard Lutnick in the Oval Office of the White House in Washington on Sept. 30, 2026, in this photo released by UPI. (Yonhap)

(ATTN: ADDS details throughout, last photo)

By Kang Yoon-seung

SEOUL, Oct. 1 (Yonhap) -- South Korea and the United States have formally selected a gas-fired power plant project in Texas as the first project under Seoul's US$350 billion investment commitment to the U.S., the industry ministry said Thursday.

The Ministry of Trade, Industry and Resources announced the three projects, including the Texas plant, after the two sides signed a memorandum of understanding (MOU) in November last year, under which South Korea pledged to invest in the U.S. in return for lower U.S. tariffs on Korean imports.

The formal announcement comes after U.S. President Donald Trump on Wednesday (U.S. time) announced South Korea's investment plans at the White House.

The investment will comprise $150 billion for shipbuilding cooperation and $200 billion for projects in various strategic sectors.

"As taxpayers' money will be injected into the initiative, we have placed top priority on the commercial viability of the projects and the national interest to ensure that not a penny goes to waste," Industry Minister Kim Jung-kwan told reporters during a briefing.

"We held consultations with the U.S. side while carefully examining the profitability and risks of each project, the prospects for recovering the investment and opportunities for South Korean companies," Kim added.

The gas-fired combined-cycle power plant project in Texas, dubbed "Project Star," calls for the construction of a 6,472-megawatt power plant for artificial intelligence (AI) data centers at a cost of $22.3 billion.

The Texas plant, located in Encinal in the southern part of the state, is scheduled to begin the first phase of commercial operations in 2029, with full operations targeted for 2032.

The industry ministry said the project is being led by reputable companies, including Related Companies, the world's ninth-largest real estate developer, and NextEra Energy, the largest power plant operator in the U.S.

"Through Project Star, the two countries will jointly address growing energy demand in the U.S. amid the expansion of the AI data center industry. The project will create a new model for economic security cooperation in strategic areas such as AI and energy infrastructure," the industry ministry said.

South Korea also announced "Project Power," under which Seoul will spend up to $120 billion to build eight nuclear reactors, including two units of South Korea's homegrown APR1400 reactor, through a bilateral framework for cooperation in the nuclear energy industry.

The industry ministry said the project will involve $100 billion in construction costs and a $20 billion contingency fund.

The project also seeks to enable South Korean companies to acquire stakes in U.S. energy firm Westinghouse and share in its profits, with the detailed terms to be worked out among the companies involved.

The government is in talks with the United States to allow Korean companies, including state-run Korea Electric Power Corp., to acquire a stake of between 5 percent and 10 percent in Westinghouse, according to the industry ministry.

"The two sides are considering a stake of less than 10 percent, as Westinghouse is not in favor of having Korean companies represented on its board," the minister said.

"Korean companies are keen to acquire a stake in Westinghouse because they see the strategic investment as helping them make inroads into the U.S. nuclear reactor market and other global markets," he said.

The ministry, however, noted that the framework provides only broad guidelines and that the two countries have not yet agreed on specific nuclear reactor projects, with details to be discussed later.

Seoul additionally unveiled "Project North," which centers on reviewing the possible construction of a pipeline and a terminal for the liquefied natural gas (LNG) industry in Alaska.

Seoul and Washington plan to review the project's commercial viability before deciding whether to proceed, although U.S. Commerce Secretary Howard Lutnick claimed South Korea is moving to invest more than $50 billion in the Alaska LNG project alone.

"The U.S. went beyond what we had agreed to regarding the Alaska LNG project. The two sides agreed to begin work on the project, subject to commercial reasonableness under the MOU and all applicable domestic legal requirements," he clarified.

The industry ministry, meanwhile, said the projects will include safeguards to protect South Korea's investments.

Under the structure, all projects under the strategic investment initiative will be carried out through an umbrella Investment Special Purpose Vehicle (I-SPV) and separate Project Special Purpose Vehicles (P-SPVs) established for each project.

The projects will also be subject to a risk-pooling arrangement, under which the proceeds from all individual projects will be divided equally between South Korea and the United States until Seoul recovers the total principal and interest on its investments.

The interest rate used for the calculation will be based on the yield on 20-year U.S. Treasury bonds plus a spread to be agreed upon by the two countries for each project.

South Korea and the United States also reached a legally binding agreement under which investments will not exceed $20 billion annually or $200 billion in total.

If the viability of a project is deemed to have been impaired, the two countries may hold consultations on adjustments to its business plan, budget and profit-sharing ratio.

"The latest projects are not merely about implementing last year's tariff agreement," Kim said.

"It is significant that South Korea and the United States are combining their respective strengths to open a new era of industrial cooperation in areas directly linked to their future industries and economic security, including energy, AI, nuclear power and LNG," Kim added.

"The projects are not merely about investing and recouping funds but will provide opportunities for South Korean companies to expand into global markets, including the United States."

Meanwhile, the South Korean government said U.S. tariffs on Korean goods would not exceed the 15 percent level agreed upon by the two countries, ahead of the expected announcement by the Trump administration on additional tariffs.

"The U.S. side has said it intends to maintain the tariff rate at around 15 percent, whether under Section 301 of the Trade Act or in any other form," Kim said.

South Korea pledged last year to invest a total of $350 billion in the United States in exchange for Washington lowering tariffs on Korean goods from 25 percent to 15 percent.

In July, however, the Office of the U.S. Trade Representative (USTR) announced its final decision to impose additional tariffs of up to 12.5 percent on South Korea, Japan and 58 other trading partners under Section 301 over concerns about forced labor.

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