Energy Security in Data: Why Supply Diversification Is Not Enough

After a US–Israeli strike on Iran in late February triggered threats to close the Strait of Hormuz, JKM (the Northeast Asian LNG price benchmark) more than doubled from pre-conflict levels. Korea's state gas utility KOGAS had already reduced its Middle East LNG share from one-third of 2024 imports to below 15% by end-2025 — yet prices doubled anyway. This is not a new phenomenon: a Northeast Asian cold snap in January 2021 pushed JKM to its all-time record; Russia's invasion of Ukraine in 2022 produced an 80-fold gap between LNG's lowest and highest price in a single year.

These repeated price shocks have a common cause. Korea is structurally exposed to global fossil fuel markets. Diversifying import sources — Energy Security 1.0 — cannot fix that exposure.

Data 1 — The Cost of Fuel-Price Uncertainty

Levelised Cost of Energy (LCOE) analysis across generation technologies reveals a consistent pattern: gas is most sensitive to fuel-price variation, coal is next, nuclear is third. Solar and offshore wind carry the highest capital cost share but have zero fuel cost — their LCOE uncertainty is therefore very limited.

LNG power's "cost of fuel-price uncertainty" exceeds 100 KRW/kWh, more than three times its construction cost (<30 KRW/kWh). Fuel cost can balloon to five times construction cost. Even at a modest LNG price of $10.5/MMBtu (far below recent spikes), recent research finds LNG LCOE already exceeds that of renewables.

Data 2 — How Gas Prices Drive Electricity Prices

Over 2002–2025, LNG fuel cost and Korea's System Marginal Price (SMP) move in near-lockstep. LNG set the SMP on 7,254 of the hours analysed — 83% of the time. As long as LNG is the marginal generator, the chain LNG price → SMP → settlement price → consumer electricity price is unbreakable. Korean electricity prices cannot be insulated from geopolitical risk, and industrial competitiveness suffers accordingly.

Data 3 — Why Diversification Failed

Korea's import mix has spread considerably since 2000: from 43.5% Indonesian concentration to a spread across Australia (25%), Qatar (19%), Malaysia (13%), and the US (12%). Total LNG imports grew from 15.24 Mt in 2000 to 46.32 Mt in 2024. The Middle East share fell from 31.9% to 29.4% — but the absolute volume imported from the Middle East grew from 4.87 Mt to 13.61 Mt. The share shrank; the exposure did not.

Energy Security 2.0: Self-Reliance

Korea needs to redefine the question. Energy Security 1.0 asked "where do we buy from?" Energy Security 2.0 asks "how much less do we need to buy?"

The core tool is renewable energy. A domestic renewable GW produces electricity at the same cost tomorrow regardless of Hormuz navigation rights, Qatari force-majeure declarations, or the next geopolitical shock. That is why renewables should be understood as a security asset, not merely a climate policy.

The Hormuz crisis is the most recent — and most expensive — reminder that the transition cannot wait.