On Wednesday 30 September, Trump announced from the Oval Office that South Korea would invest some 200 billion dollars in American energy projects, including about 54 billion dollars toward a liquefied natural gas project in Alaska. The project is an 807 mile pipeline carrying gas from the North Slope to a liquefaction terminal on the southern coast, from where it could be shipped to Asian markets. Senator Dan Sullivan, facing a competitive re-election contest in Alaska, stood alongside him.
Within a day, Seoul added a clause.
South Korea’s trade minister Kim Jung-kwan said both sides shared the understanding that the Alaska project would not proceed unless it was commercially viable. President Lee Jae Myung said work would begin on the condition that commercial viability was confirmed and that South Korean legal procedures were complied with. The trade ministry said Washington’s announcement had gone beyond what was agreed.
Both descriptions of the same meeting are accurate. One of them contains a condition.
The parts that were firm were stated firmly. Both sides confirmed an intention to proceed with a 22.3 billion dollar gas-fired power facility in Encinal, Texas, dedicated to supplying co-located data centres, which South Korea’s industry ministry had already named as the first project selected under the 200 billion dollar programme. That one has a site, a size, a customer and a number.
The Alaska pipeline has a map and half a century of history. Efforts to build it have failed repeatedly since long before any of the current participants were involved, and Korean officials have previously described gas pipeline projects as high-risk and difficult to justify on commercial grounds.
This is a pattern that anybody who has ever sold a large piece of work will recognise, and the lesson runs in both directions.
A client says yes in a meeting. Everybody shakes hands. The supplier leaves and tells their team the contract is won, orders the stock, hires the person, maybe mentions it to the bank. What the client actually said was yes in principle, subject to board approval, subject to budget, subject to the thing proving out. Both parties walked out of the room with a different document in their heads, and neither of them lied.
The discipline is unglamorous. Write down what was agreed, send it to the other side the same day, and watch carefully for the clause that comes back added. The clause that comes back added is the real state of the deal. Nobody inserts a condition they do not intend to use.
For the smaller party in an unequal negotiation, there is a second lesson in how Seoul handled it. They did not deny the conversation, they did not refuse the relationship, and they did not pick a public fight. They restated the agreement with its condition intact, in their own words, within twenty four hours, through their own ministry.
The announcement travelled further and faster. The condition is the thing that will decide whether anything gets built.
Source: The Star / Reuters, “Seoul says no decision on Alaska gas investment announced by Trump”
