The Taiwanese government has announced its intention to purchase six million tons of liquefied natural gas (LNG) annually from the Alaska LNG project and has planned a $4.4 billion investment for the construction of this system.
Taiwan's Export Commitment
U.S. President Donald Trump has referenced this issue in a statement, emphasizing that Taiwan has committed to a "purchase commitment" equivalent to 30 percent of the production from this facility. The project is owned by Glenfarne Group and the state-owned Alaska Gasline Development Corporation, which hold 75 percent and 25 percent of the shares, respectively.
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Negotiation Stages and Investment Conditions
The Ministry of Energy of Taiwan has stated this commitment within the framework of an ongoing negotiation process and emphasized that the final investment amount will be determined after review and budgeting. According to this statement, "specific investment arrangements, equity ratios, and related conditions will be comprehensively reviewed in subsequent negotiations and commercial contracts."
The Alaska LNG project is an old infrastructure plan to transport rich gas resources from northern Alaska to the Cook Inlet area for liquefaction and export. This project requires the construction of an 800-mile pipeline to connect gas fields in the northern tundra to an LNG plant with a capacity of 20 million tons per year.
The Alaska LNG project initially had the support of companies BP, ExxonMobil, and ConocoPhillips, but these three companies exited in 2016 after an independent assessment of the project's economics. Currently, only Glenfarne and the Alaska Gasline Development Corporation own the project.
With the need to build a $9 billion gas processing plant in the Arctic, and then construct an 800-mile pipeline through harsh deserts, the cost of this project is expected to be between $45 billion and $55 billion for a capacity of 20 million tons per year. This amounts to about $2.7 billion per ton per year, which is significantly higher than the $1.6 billion per ton cost in the Canada LNG Phase 2 project in Kitimat, British Columbia.
While two weeks ago, the Canada LNG project received investment approval for its $23 billion Phase 2 expansion, the Alaska LNG project is in a sensitive position due to its natural competition for the East Asian market.
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