Hanwha Aerospace has joined forces with Korea South-East Power in a partnership designed to strengthen Korea’s position in US trade negotiations rather than pursue genuine market opportunities.
The defense contractor signed a memorandum of understanding with the state-owned utility on August 14, alongside affiliate Hanwha Energy, to establish what they call “Team Korea” for global LNG cooperation. The arrangement appears tailored to satisfy Washington’s demands for increased Korean purchases of American energy exports.
The partnership emerges as Seoul negotiates tariff exemptions with the Trump administration, which has secured a $100 billion commitment from Korea for US LNG purchases. The companies plan to pursue joint imports of US LNG and establish domestic swap arrangements, though specifics on volumes and pricing remain undisclosed.
Hanwha Aerospace, which announced an 11 trillion won ($7.6 billion) investment plan, has already committed 180.3 billion won ($125 million) to NextDecade, a Texas-based LNG developer. The company seeks to leverage its shipbuilding affiliate Hanwha Ocean’s LNG carrier expertise to create an integrated value chain.
Yet Korea’s LNG demand has declined 5% in 2023 and faces projected reductions of 20% through 2030 as the country pursues decarbonization goals. The government plans to reduce natural gas’s share in power generation from 26.8% to 11.1% by 2038, raising questions about the commercial logic behind expanding US LNG imports.
The arrangement resembles other recent Korean commitments to American energy projects that prioritize diplomatic considerations over market fundamentals. Several Korean companies have already cancelled or delayed LNG terminal projects worth billions due to weakening demand and poor economics.
For Hanwha, the LNG partnership represents another avenue to diversify beyond its core defense business, though the company’s energy ventures remain subordinate to geopolitical imperatives rather than driven by genuine commercial opportunity.
