Hormuz crisis lays bare Korea’s energy readiness gap with Japan, China

This article is by Sarah Chea and read by an artificial voice. [NEWS ANALYSIS] The blockade of the Strait of Hormuz has laid bare Korea's acute vulnerability in energy security — arguably the most exposed among major Asian economies. While Korea scrambled to secure crude oil and LNG supplies, neighboring Japan — whose energy self-development rate is more than four times higher — was likely far less rattled. China, meanwhile, is in an entirely different league as a major energy producer itself. Despite facing similar resource constraints as Korea, Japan has built greater resilience through aggressive overseas equity investments and diversified procurement channels, allowing it to maintain relatively stable energy supplies during the latest crisis. Energy experts warn that Korea remains dangerously fragile in terms of strategic energy security, and as the rivalry between the United States and China intensifies, strengthening the nation's energy self-sufficiency is no longer optional but essential. Korea lags in Asia Korea's energy self-development rate — the share of oil and gas secured through domestic companies' overseas and local production relative to total imports — stood at just 10.8 percent in 2024, according to data from the Ministry of Trade, Industry and Resources. This was down from 15.5 percent in 2015. By contrast, Japan raised the ratio from 27.2 percent to 42.1 percent over the same period. Tokyo aims to push the figure to 60 percent by 2040, according to data from Japan's Ministry of Economy, Trade and Industry. Both Korea and Japan are manufacturing powerhouses in sectors such as automobiles, semiconductors and petrochemicals, yet remain overwhelmingly dependent on imports for the oil, natural gas and critical minerals needed to sustain those industries. To hedge against supply risks, they pursue equity-based resource development by investing in large-scale overseas energy projects operated by global oil majors such as ExxonMobil and Shell, or by partnering directly with host governments to secure production stakes. Japan has been particularly aggressive in expanding its LNG self-development capacity, with Australia accounting for roughly 40 percent of its natural gas imports. Much of that supply comes from projects they have stakes in, including the Ichthys LNG Project. Although Japan joined Western sanctions against Russia, it has continued importing LNG from the Sakhalin-2 project, in which Japanese firms have held equity stakes since the early stages of development. Sakhalin-2 accounts for roughly 10 percent of Japan's LNG imports. Australia is also central to Korea's overseas energy investment strategy, where Korea Gas Corp. holds a 15 percent stake in the GLNG Project, a massive liquefied natural gas development from which Korea has imported roughly 3.5 million tons of LNG annually under a 20-year supply agreement that began in 2016. In the case of crude oil, Japan's dependence on the Middle East stands at about 95 percent, even higher than Korea's 70 percent. Yet Japan has secured key equity stakes in offshore oil fields in Abu Dhabi, allowing it to produce and procure substantial volumes directly from the region. "Japan's primary exposure to Middle Eastern fossil fuels may be greater, but when measured across resilience indicators such as self-development rates, refining autonomy, strategic reserves and alliance-based resource networks, Korea remains the most vulnerable among major East Asian economies," said Cho Hong-chong, an economics professor at Dankook University. Japan surpassed its 2030 target for oil and natural gas self-development — reaching 40.6 percent in 2020 against a goal of 40 percent — and raised its target to above 50 percent. Japan is also the only Group of 7 country that provides large-scale public financing for overseas resource development projects, with much of the support funneled through the Japan Organization for Metals and Energy Security, or Jogmec. China, meanwhile, as ...