Beyond Capacity: Nick Curum Highlights Critical Chokepoint Risks in Global LNG

In a recent LinkedIn post, Nick Curum challenges conventional approaches to energy risk assessment, arguing that boards are frequently measuring the wrong metrics. Curum, a specialist in strategic risk, points out that while many risk models focus on supply capacity, they overlook the more critical vulnerabilities inherent in global energy flows.

Curum highlights a significant disconnect between perceived and actual risk, stating:

“78% of global LNG flows through just six maritime chokepoints—yet most risk models focus on supply capacity alone. Supply capacity tells you nothing about flow failure.”

As Curum elaborates, the failure points for global liquefied natural gas (LNG) are not typically at the source of production but rather in the transit routes that are ill-equipped to handle disruptions. He emphasizes that these chokepoints, while perhaps not facing outright destruction, are structurally constrained and slow to reroute, making them highly susceptible to delays.

The Vulnerability of Chokepoints

Curum argues that the focus on mere supply capacity creates a false sense of security among many corporate boards. He explains that the real danger lies in the systemic fragility introduced by a few critical transit points. According to Curum:

“Global LNG does not fail where gas is produced. It fails where flow is forced through routes that cannot absorb friction.”

This perspective suggests that even if a region has ample gas production, a disruption at a key chokepoint can have cascading effects on market prices and availability. Curum points out that these vulnerabilities are often underestimated because they don’t fit neatly into traditional supply-side risk analyses.

Three Unanswered Questions for Boards

To illustrate the gap in current risk management practices, Curum poses three crucial questions that he believes most boards struggle to answer clearly:

1. Where does our gas have to pass?
2. What cannot be rerouted quickly?
3. Which delay would move prices before we could respond?

Curum contends that a lack of clear answers to these questions indicates that the true risk is already being reflected in market pricing, often in ways that are not immediately apparent to the company. He frames these questions as essential for any entity allocating capital in energy infrastructure.

The Urgency of Strategic Risk Assessment

The implications of these overlooked risks are significant, as Curum notes the dynamic between markets and governance:

“Markets move before governance. Delays propagate faster than decisions. Reassurance breaks at the narrowest point in the system.”

This observation underscores the need for proactive and sophisticated risk assessment that anticipates market reactions and operational bottlenecks. Curum’s analysis suggests that organizations should shift their focus from static capacity assessments to dynamic flow vulnerability, particularly concerning critical chokepoints like the Strait of Hormuz or the Suez Canal, or other less-discussed but equally critical routes.

By framing these issues, Nick Curum encourages a more nuanced understanding of energy supply chain resilience, urging leaders to critically examine their risk models and ensure they account for the chokehold that constrained transit routes can exert on global energy flows.