South Korea, Taiwan seem particularly exposed to rising LNG prices - WSJ
TL;DR
South Korea and Taiwan face heightened vulnerability to rising LNG prices due to geopolitical tensions and supply disruptions, impacting their energy security and economic policies. Both rely heavily on LNG imports, with South Korea increasing coal use and Taiwan building strategic reserves to mitigate risks.
Tags
South Korea, Taiwan seem particularly exposed to rising LNG prices - WSJ
South Korea and Taiwan Face Heightened Vulnerability Amid Surging LNG Prices
South Korea and Taiwan are emerging as particularly exposed to rising liquefied natural gas (LNG) prices, driven by geopolitical tensions and supply disruptions in key export corridors. The shutdown of Qatar's largest LNG export plant following Iranian attacks, coupled with shipping bottlenecks in the Strait of Hormuz, has pushed Asian LNG spot prices to a three-year high of $25.40 per million British thermal units (MMBtu) as of March 2026. Both economies rely heavily on LNG for electricity generation and import nearly all their gas requirements, leaving them vulnerable to prolonged price volatility.
South Korea's LNG demand in 2025 grew modestly by 1%, but its long-term energy strategy envisions a declining role for gas as it phases out coal by 2040. In December 2025, the country imported 3.28 million tonnes of LNG, with Australia, Malaysia, and Qatar as key suppliers. To mitigate rising costs, South Korea has increased coal-fired power generation, which accounted for 33% of electricity output in December 2025, up from 27% in December 2024. The government has also extended LNG import tariff waivers to ease financial pressure on utilities.
Taiwan, meanwhile, faces acute LNG supply risks, with 50% of its energy needs met by imported gas. The island's strategic reserves are projected to last only until March 2026, prompting emergency measures such as maintaining decommissioned coal-fired plants for crisis activation. In October 2025, Taiwan's state utility initiated tenders to build coal stockpiles, securing 960,000 tonnes for January-March delivery and 1.52 million tonnes for March-August 2026.
The energy security challenges for both nations are compounded by global LNG market dynamics. With 86% of LNG passing through Hormuz destined for Asia, disruptions in this critical chokepoint threaten to prolong price spikes. Analysts warn that energy-driven inflation could constrain monetary policy flexibility for the Bank of Korea and Taiwan's central bank, particularly as LNG costs remain elevated.
As Asian markets grapple with LNG volatility, South Korea and Taiwan's reliance on gas underscores the region's broader struggle to balance energy security, cost efficiency, and decarbonization goals.
