Korean Steel Supplier and Gas Buyer Signs Up for Alaska LNG
Glenfarne Group founder and CEO Brendan Duval and POSCO International Corporation CEO KyeIn Lee commemorated the agreement in Washington, D.C., on December 1, joined by US Secretary of the Interior Doug Burgum, US Secretary of Energy Chris Wright, US Senator Dan Sullivan, and US Representative Nick Begich III.
Photo Credit: Glenfarne Group
“Heads of Agreement” is another term for “letter of intent” or “memorandum of understanding,” more common in British or Australian parlance. It’s also the term that a Korean steel manufacturer uses to describe its role in the Alaska LNG project, the proposed 807-mile pipeline from the North Slope to an export terminal on Cook Inlet.
Ahead of a final investment decision (FID) as early as next month, Glenfarne Alaska LNG, the subsidiary of AK LNG developer Glenfarne Group, inked a strategic partnership with POSCO International Corporation to secure a significant portion of the steel required. The Heads of Agreement, the first signed for AK LNG, also entitles POSCO to purchase 1 million tonnes of liquified natural gas per year for twenty years.
Steel for Gas, Gas for Steel
POSCO International Corporation is the largest sales representative of POSCO Group, Korea’s largest steel producer and a major Korean LNG importer. The strategic partnership signals interest in the project that Glenfarne is assembling. POSCO is also putting money forward, agreeing to a pre-FID capital investment; the exact amount was not disclosed.
“POSCO Group is one of the world’s leading steel and energy companies, and their commitment to Alaska LNG reflects the high degree of support in Asia and across the Pacific for unlocking this valuable source of abundant, competitive LNG. Our partnership represents an important milestone in Glenfarne’s progress developing this project, backed by strong industry support and engagement,” says Glenfarne Group founder and CEO Brendan Duval.
The steel supply and capital investment are considered legally binding. However, like a memorandum of understanding, the Heads of Agreement for LNG offtake is not a binding contract. It builds upon a preliminary offtake agreement with POSCO that Glenfarne announced earlier this year.
In October, when Glenfarne announced a letter of intent with Tokyo Gas Company, the developer said it lined up buyers in Japan, South Korea, Taiwan, and Thailand for 11 million tonnes. Glenfarne expected 16 million tonnes’ worth of buyers would need to be secured before FID.
AK LNG is planned as a 42-inch diameter pipeline from the North Slope to Nikiski. About 20 million tonnes per year would be for export. Glenfarne Communications Director Tim Fitzpatrick notes that about 15 percent of the pipeline’s capacity is reserved for in-state use.
Glenfarne is developing AK LNG in two financially independent phases to accelerate project execution. Phase 1 includes the domestic pipeline to deliver natural gas approximately 765 miles from the North Slope to Southcentral, satisfying local energy needs. Phase 2 will add the LNG terminal and related infrastructure to enable export capability.
The State of Alaska, through the Alaska Gasline Development Corporation, owns 25 percent of the AK LNG project. Glenfarne became majority owner in March.
While Glenfarne is signing up offtake partners, Worley is completing the final engineering and cost validation for the pipeline, currently the only federally authorized export terminal on the US Pacific Coast.
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Also in this issue: building a company and planning an exit strategy; several ESOPs, and UAS’ foray into a new model for tuition. Enjoy!