After Hormuz, the Arctic? LNG routes may shorten, but Russia risk looms large

The resumption of armed conflict between the United States and Iran — and attacks on civilian oil tankers in the Strait of Hormuz — have sharpened the urgency of diversifying South Korea's energy supply chain. With geopolitical risks along Middle Eastern energy routes rising, LNG imports routed through the Russian Arctic and the US state of Alaska are drawing attention as alternatives. A new analysis finds that Russian Arctic LNG would do the most to reduce dependence on any single supplier, but carries sanctions risks and navigational hazards, while Alaska LNG offers stability at the cost of limited diversification.

The findings appear in a paper published Thursday in the Korea Maritime Institute's academic journal Ocean Policy Research. The paper, titled "Diversification of South Korea's LNG Supply Chain via Arctic and Alaska Routes and Its Energy Security Implications," compares the benefits and risks of the two supply chains.

South Korea imports 93 percent of its energy resources and relies heavily on long-haul maritime shipping through the Strait of Hormuz and the Strait of Malacca from the Middle East and Southeast Asia. Any conflict at a key chokepoint or in a major supplier country could simultaneously disrupt energy prices and delivery schedules.

The researchers compared three scenarios: maintaining the current LNG import structure, sourcing 15 percent of total imports from Russian Arctic LNG, and sourcing 2 percent from Alaska LNG. Based on South Korea's 2024 LNG import volume of 46 million tons, the scenarios assumed new imports of 6.9 million tons from the Russian Arctic and 900,000 tons from Alaska.

The comparison is summarized below, based on Korea Maritime Institute data published in Ocean Policy Research.

Current structure / Russian Arctic LNG (15% share) / Alaska LNG (2% share)

Supply concentration (HHI): 2,064 / 1,714 / 2,033

Cost-effectiveness: moderate / improved / partially improved

Navigational accessibility: medium / low / high

Geopolitical risk: stable / very high / low

Overall assessment: baseline scenario / high risk, high reward / low risk, supplementary

Sourcing 15 percent of LNG from the Russian Arctic produced the largest reduction in supplier concentration. South Korea currently imports LNG primarily from Australia (28 percent), Qatar (18 percent), the United States (12 percent) and Malaysia (10 percent). Under the 15 percent Russian Arctic scenario, Australia's share would fall from 28 percent to 24 percent, Qatar's from 18 percent to 15 percent, and the US share from 12 percent to 10 percent.

The Russian Arctic route also scored better on cost-effectiveness, as shorter shipping distances to South Korea would reduce both freight costs and transit time compared with existing routes. However, the route requires ice-class or icebreaker support, higher insurance premiums and the ability to manage seasonal sea-ice variability. When international sanctions and the South Korea-US alliance are factored in, the researchers concluded that Russian Arctic LNG represents a "high risk, high reward" strategy.

South Korea is also conducting a trial voyage to test the practical viability of the Arctic route. The Panstar Acro, the first South Korean container ship to attempt an Arctic trial run, departed Busan New Port on Aug. 22 and entered the Arctic Ocean on Monday. The vessel is heading to Europe via the Northeast Passage along Russia's northern coast. The Ministry of Oceans and Fisheries said the voyage — carried out with actual cargo on board — will be used to verify the technical, environmental and commercial feasibility of the Arctic route.

Alaska LNG's main advantage is geopolitical stability. Because it uses standard North Pacific shipping lanes, it carries relatively lower burdens in terms of icebreaker requirements and Arctic-specific insurance. However, under the scenario in which Alaska LNG accounts for just 2 percent of total imports, its effect on reducing supplier concentration was smaller than that of Russian Arctic LNG.

The researchers also raised the possibility that expanding Alaska LNG imports and increasing reliance on US-sourced LNG could create a different form of supplier concentration. They said LNG could be used as leverage in trade and tariff negotiations with Washington. The EU was cited as a parallel case: after reducing its dependence on Russian gas, it increased its share of US LNG, only to find itself once again heavily reliant on a single country.

The researchers recommended that South Korea weigh both cost-effectiveness and geopolitical stability rather than leaning on either Russian Arctic LNG or Alaska LNG alone. Russian Arctic LNG offers strong supply diversification but high geopolitical risk, while Alaska LNG is stable but functions more as a supplementary option, they said.

Deputy Minister of Oceans and Fisheries Nam Jae-heon said the Russia-Ukraine war and the US-Iran conflict demonstrate how critical it is to secure a stable supply chain. "The Arctic route is a new sea lane that can expand both logistics and energy supply chains," he said, adding that the government would continue developing the Arctic route as a medium- to long-term national strategy.