South Korea has officially selected a gas-powered electricity generation project in Texas as the first investment venture in the United States under a trade agreement reached last year. This move follows months of friction between the two allies over the pace of implementing Seoul's investment pledges, and it is expected to help ease tensions.
According to Yonhap News Agency and other local media, the project is situated in Encinal, Texas, with an estimated investment of $22 billion and a total installed capacity of 6.3 gigawatts. The development will initially involve the construction of 1.4 gigawatts of gas turbine power generation, with an additional 4.9 gigawatts of combined-cycle capacity to be added later, aimed at meeting the surging electricity demand driven by artificial intelligence data centers.
The South Korean government has not yet released specific details, stating on Monday that no official announcement will be made until procedural steps, including a briefing to the National Assembly, are completed. Media reports indicate that the government is scheduled to brief lawmakers on the investment negotiations on September 17, with the earliest possible signing of a memorandum of understanding (MOU) set for September 18.
This development comes nearly a year after the two countries reached their initial trade framework. Under that agreement, the U.S. applies a 15% tariff on South Korean exports, while Seoul committed to investing $350 billion in the U.S. However, the delay in finalizing the first project drew criticism from President Donald Trump, who had threatened to raise tariffs on South Korean goods by up to 25%.
Selecting this project marks a significant step for Seoul in converting its high-profile investment pledge into a tangible initiative, potentially removing a longstanding source of friction between the two nations. Reports from Yonhap, citing an anonymous parliamentary official, suggest a last-minute twist: the U.S. requested that the total value of investment projects submitted by South Korea exceed the previously agreed $350 billion figure.
The report adds that Seoul is in discussions with Washington to ensure that actual committed investments do not surpass the $350 billion threshold. South Korea has denied this portion of the Yonhap report. In a statement released on Tuesday evening, the Ministry of Trade said: "The U.S. has not requested investments exceeding $350 billion. Under the strategic investment MOU, total investments in the U.S. will not exceed $200 billion in any case, with an annual remittance cap of $20 billion."
The reports also note that the size and timing of the first remittance have not yet been determined. Yonhap added that other investment options under consideration by Seoul include eight large-scale nuclear reactors and a liquefied natural gas project in Alaska. This commitment from South Korea mirrors similar pledges made by others in the region.
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