The most recent figures from China’s customs agency show North Korea’s apparent crude oil cut off has stretched past the two-year mark, leaving a 1 million tonne deficit in the DPRK’s oil imports.

But despite the majority of China’s oil exports to North Korea disappearing from the trade figures, there have been no reports of fuel shortages or price hikes within the country, with some sources indicating increasing levels of fuel consumption in the DPRK.

The news also comes as China’s oil exports found themselves in the public spotlight. Following North Korea’s January nuclear test, U.S. Secretary of State John Kerry pushed for stronger sanctions on the DPRK.

The U.S. proposal included calling for Beijing’s backing in curtailing oil supplies to North Korea, which if China’s customs agencies are to be believed, have already dropped by 60 percent since 2013.

SLIPPERY SLOPE

Analysis of the yearly export figures shows a nosedive from 875,000 tonnes of oil to just 340,000 the following year, a trend which remained relatively unchanged throughout 2015.

The effect on the DPRK’s trade bill was even more pronounced. A lack of crude in the data combined with withering global oil prices meant that on paper, North Korea spent nearly $600 million less on oil deliveries in 2015 than in 2013.

Whether or not the DPRK’s bank balances were actually spared the sum however is far from clear. Experts contacted by NK News unanimously agreed that the absence of crude in China’s trade figures does not mean North Korea is subsisting without the majority of oil shipments from its long standing patron.

“There has been no cut-off in oil and fuel shipments from China to the DPRK. Foreign residents in the DPRK have not reported any signs of shortage. Ships have been observed carrying fuel from China to Nampho, and visitors to Dandong have confirmed that the pipeline is still operational,” Curtis Melvin, a researcher at the U.S. Korea Institute in Washington, D.C. said.

David Von Hippel, a senior researcher at the Nautilus Institute for Security and Sustainability agreed.

“Really I think that Chinese supplies are continuing, they’re just off-book now.”

Source: etochina, NK News

Source: etochina, NK News

REFINED TASTES

North Korea is thought to have one functioning refinery at Pongwha, less than twenty kilometres from the Chinese border city of Dandong, with a pipelines running between the two. The complex traditionally refined Chinese crude oil supplies flowing from a small facility on the river Yalu.

Satellite images taken over the last two years have shown smoke coming from the chimneys, indicating some parts of it have remained functional despite the lack of shipments indicated by the trade data.

“Satellite imagery of the Ponghwa Chemical Complex indicates it is still operational.” Melvin added.

Nor have there been any reports of changing oil prices in the DPRK, with one article from Daily NK published last year claiming the opposite, that fresh supplies from Russia were driving prices down.

“Usually we think oil is still exported to North Korea because if it really were not, prices would have increased. However, they have decreased in North Korea. Meaning the oil situation there is not serious,” Lee Seok-gi at the Korea Institute for Industrial Economics and Trade told NK News.

Satellite imagery from 2015 showing smoke coming from one of the refinery stacks. Source: Google Earth

Satellite imagery from 2015 showing smoke coming from one of the refinery stacks. Source: Google Earth

THE REMAINDER

Chinese customs figures for already refined oil products however did not suffer the same treatment. Amid falling oil prices North Korea sometimes upped its monthly deliveries of gasoline, diesel and fuel oils, or otherwise opted to save on fuel bills.

Overall the DPRK imported slightly more fuel products from neighboring China last year than in 2014, but spent less money doing so.

Diesel deliveries appeared to be an exception, which on the face of it fell by nearly 20 percent to under 50,000 tonnes. Closer analysis of the trade figures however shows a different trade category, marked as “other diesels or fuels” jumped from nearly zero in 2014 to over 60,000 tonnes in 2015.

There has been no cut-off in oil and fuel shipments from China to the DPRK

“My guess is that either the fuels imported under that category are ‘off-spec’, that is, a grade of fuel that’s not consistent with the other categories, or is something that should be regular diesel and is mis-categorized,” Von Hippel told NK News.

Lee also stressed the need for caution when looking at very specific trade codes, which leave open the possibility for error, and other discrepancies.

“Usually, it is quite hard to know what happened in trade items related to oils due to political reasons and flexibility including errors between North Korea and China.”

However the unit prices of both the diesel imports and that of the differently categorised fuel are also similar, indicating in total the DPRK could have imported 110,000 tonnes of diesel fuels in 2015. If accurate the figure would roughly double it’s 2014 equivalent.

“(I’m) finding more and more diesel generators being imported, so maybe some cheaper (than motor fuel) grade of diesel is being imported for those units,” Von Hippel continued.

chart 2

Source: etochina, NK News

One oil product that has remained remarkably absent from Chinese trade figures is kerosene. The last time the DPRK purchased any sizable quantity of jet fuel from its neighbor was back in March 2014.

Since then North Korean imports have ticked over at just a few hundred tonnes per month. Given a large jet can burn through 120 tonnes in a single flight, the low imports would imply the DPRK is either refining the fuel domestically, or sourcing it from other countries.

The data is also at odds with Washington’s proposed oil sanction, which according to media reports specifically mentioned aviation fuels.. Regardless of where North Korea is getting the fuel from however, Beijing made their stance on the proposal clear.

“It is also agreed that sanctions are not an end in themselves, and the key is to restart dialogue and negotiation so as to bring the Korean nuclear issue back to the correct track of dialogues and consultations,” Foreign Ministry Spokesperson Hua Chunying said following Kerry’s visit to China.

Additional reporting by Hyunbi Park

Featured image: Green Oil by XcBiker (Flickr)