Archive for the ‘Gasoline’ Category

How North Korea turns coal into gas, and what it might mean for sanctions

Tuesday, December 18th, 2018

By: Benjamin Katzeff Silberstein

Wall Street Journal has an interesting and thoroughly researched report out today, on North Korea’s use of a technique to synthetically produce synthetic fuels from coal:

China, North Korea’s longtime ally, has provided technology and expertise for the coal-conversion efforts, according to Chinese companies. One said in July that it is supplying a large coal gasifier designed to produce 40,000 cubic meters an hour of synthetic gas to an industrial zone north of Pyongyang.

That output alone would be enough to produce synthetic fuels equivalent to about 10% of North Korea’s annual imports of crude and refined oil in recent years, according to David Von Hippel, an expert on North Korea’s energy sector at the Nautilus Institute.

[…]

It has become cheaper in recent years—in part because of Chinese development of the technology—and remains viable for countries with abundant coal and few alternatives.

North Korea obtained German coal-gasification technology from the Soviets around the 1960s but did little to develop it, and became dependent on subsidized crude from Russia and China.

[…]

Crucially, coal gasification has helped provide raw materials to increase output of fertilizer and plastic sheeting for greenhouses, boosting food production, and enabled other industries to develop products such as steel alloys and pipes, experts said.

The technology is also now used in small-scale power plants to boost electricity supplies, according to footage broadcast by North Korean state television in November.

One Chinese company, Hebei Kaiyue Group, said on its website that seven officials from North Korea’s Academy of Sciences visited one of its facilities in June to study how it converts coal to methanol, ammonia and dimethyl ether, which can be used as a diesel alternative.

The large gasifier slated for the industrial zone north of Pyongyang was built by Yangmei Chemical Industry Machinery Co. Ltd, a subsidiary of one of China’s biggest coal companies; it has been completed but not yet transported to North Korea, as the Chinese awaited North Korean instructions, according to two people involved. The company declined to comment.

Full article/source:
North Korea Turns Coal Into Gas to Weather Sanctions
Jeremy Page
Wall Street Journal
2018-12-17

I have a brief quote in the story, basically saying that even if North Korea can only produce fairly moderate quantities of gasified, synthetic fuels through this technique, it could potentially be very significant for the economy as a whole. This is particularly true for transportation and industrial manufacturing. The former is crucial not only for the state-side of the economy, but also for the private sector (i.e.: markets and entrepreneurs).

When trying to asses whether North Korea can “weather” sanctions or not, it’s meaningful to remember that the economy as such is still, partially, recovering from the near-complete collapse of the 1990s. So the quantities needed to make a significant contribution to industrial production may not be that massive. All of this is a way of getting at, in absence of actual numbers, how much this coal gasification technique may matter for North Korea. Putting together whatever oil and fuel North Korea can get through smuggling, regular imports, non-commercial transfers from China, and coal gasification, North Korea is probably muddling through sanctions relatively well, and better than many would have expected a year or so ago, at least in some respects.

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Fuel prices are dropping in North Korea, and that’s a little odd

Tuesday, July 10th, 2018

Benjamin Katzeff Silberstein

As in the rest of the country, gas prices continue to fall in Pyongyang, data from NK Pro shows, but remains much higher than the closest available month of 2017.

At the same time, recent figures from China state that its exports of refined fuel products to North Korea continues to remain well below the ceiling mandated by UN sanctions. Asia Press reports a slight increase of diesel prices in Yanggang and North Hamgyong provinces, but it’s a fairly minor one and the data by NK Pro and Daily NK still represents more data points. So what’s a plausible explanation here?

My best guess is that it’s a combination of increased smuggling, perhaps aided by China’s declining vigilance in enforcing sanctions and restrictions against illicit trade across the border. Gas prices shot up last spring when China decided to drastically cut sales of fuel products to North Korea, citing financial reasons (that North Korea wouldn’t be able to pay), but the decision was very likely influenced by political considerations as well. Now with the multitude of summits between Kim Jong-un and Xi Jinping, and Kim and Trump, China’s willingness to enforce sanctions with the same vigor as it did through the second half of 2017 and the first half of 2018 has likely waned, impacting matters like fuel prices as well. It also seems plausible that fairly small changes in supply could change prices quite drastically, since North Korea already consumes a relatively small amount of gasoline and diesel on the whole.

Another possibility is that Chinese flows of unrefined oil through the pipeline in northwestern North Korea, through Dandong and Sinuiju, have increased. These aren’t monitored in the same way as Chinese sales of refined fuel to North Korea, and as far as I know, could be increased without the international community easily noticing. These oil flows also aren’t part of regular trade between the countries, and should be regarded more as Chinese financial support to North Korea.

My best bet would be on a combination of these two factors, but there’s obviously much we don’t know about the development.

Update 2018-07-15: NK News reports some US government data seeming to hint at what’s been going on. At least 89 hip-to-ship transfers occurred between January and May, in violation of UNSC sanctions:

North Korea likely conducted at least 89 ship-to-ship transfers to illicitly obtain refined petroleum products between January 1 and May 30, U.S. data provided to the United Nations and seen by NK News on Friday claims.

Pyongyang may have illegally imported up to 1,367,628 barrels of refined petroleum as a result of the transfers, upper-end estimates suggested, over double the 500,000 barrels authorized for export to North Korea each year by current UN sanctions.

Consequently, the U.S. recommended that the UN 1718 sanctions committee issue a “public note verbale to all UN Member States to inform them that the DPRK has breached the UNSCR 2397 OP5 refined petroleum product quota for 2018,” and that all countries should “order an immediate halt to all transfers of refined petroleum products to the DPRK.”

Since the May 30 data cut-off, the Japanese government has revealed details surrounding three extra cases of North Korean vessels caught conducting likely ship-to-ship transfers, with two on June 21 and June 22, and one on June 29.

Article source:
N. Korea likely conducted 89 illicit ship-to-ship transfers in 2018: U.S. data
Chad O’Carrol
NK News
2018-07-13

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China’s exports of fuel to North Korea below UN sanctions ceiling

Friday, July 6th, 2018

By Benjamin Katzeff Silberstein

Between January and May, Chinese imports of refined oil products did not go over the ceiling mandated by UN sanctions, reports Voice of America (in Korean):

중국이 올해 1월부터 5월까지 북한에 제공한 정제유가 유엔이 정한 상한선의 한 달 허용치 수준에 그친 것으로 나타났습니다. 이 정도 수준을 유지한다면 유엔이 정한 정제유 수출 한도를 넘지 않을 것이라는 지적입니다. 김현진 기자가 보도합니다.

중국이 올해 1월부터 5월까지 북한에 정제유 5천921t을 공급한 것으로 나타났습니다.

유엔 안보리 산하 대북제재위원회 (1718 위원회) 홈페이지에 따르면 중국은 1월 201t, 2월 1천 392t, 3월 2천438t, 4월 437t, 5월 1천451t을 북한에 공급했다고 유엔에 보고했습니다.

5개월 총공급량을 배럴로 환산하면, 약 4만7천400 배럴로 유엔이 설정한 한 달 허용치를 조금 넘는 수준에 불과합니다. 연간 대북 정유공급 제한 50만 배럴을 12개월로 나누면 한 달에 4만 1천 배럴 정도입니다.

유엔 안보리는 지난해 12월 채택한 대북결의 2397호를 통해 북한으로 유입이 가능한 정제유의 상한선을 연간 50만 배럴로 정했습니다. 이전 결의가 상한선으로 정했던 200만 배럴에 비해 75%가 줄어든 것입니다.

아울러 올해 1월부터 각국이 북한에 판매하거나 제공한 원유와 정제유 양과 금액을 보고하도록 했습니다.

대북제재 전문가인 윌리엄 브라운 조지타운대학 교수는 중국이 올해 초부터 5월까지 북한에 제공한 정제유는 극히 소량으로, 유엔 결의를 잘 지키고 있는 것으로 보인다고 말했습니다.

[녹취: 브라운 교수] “The recent data provided to the UN from China suggest that they exported about 40,000 barrels to the North Korea in the first 5 months, that well below UN sanction limit…..”

또 올해 남은 기간 동안 이 정도 수준을 유지한다면 유엔이 정한 정제유 수출 한도를 넘지 않을 것으로 보인다고 말했습니다.

브라운 교수는 특히 김정은 국무위원장이 중국을 방문했던 5월 중국이 북한에 제공한 정제유도 소량에 불과했다고 지적했습니다.

[녹취: 브라운 교수] “The month after Kim’s visit to Beijing, China is still only shipping very small amount of refined products and it is still obeying the UN sanctions, according to China. But actually it’s very important that China is telling the world it is still obeying the sanctions… ”

자료에 따르면 중국은 5월 1천451t의 정제유 제품을 북한에 공급했습니다. 전 달 437t을 공급한 것에 비해 3배 이상 늘었지만, 지난 해 같은 기간6천400t에 비해 77% 감소한 규모입니다.

배럴로 환산해도 1만1천608배럴로 한 달 허용치에 크게 못 미치는 수준에 불과합니다.

앞서 헤더 노어트 국무부 대변인은 29일 폼페오 국무장관과 왕이 중국 외교부장과의 전화통화 소식을 전하면서, 폼페오 장관은 유엔이 금지하는 선박 환적을 통한 북한의 불법적인 석탄 수출과 정제유 수입과 관련한 유엔 안보리의 모든 대북 결의안에 대한 전면적 이행의 중요성을 강조했다고 전했습니다.

한편 올해 북한에 들어간 전체 정제유를 월별로 보면 1월, 569.62t에서 2월 3천274t으로 크게 늘었고 3월에는 1천t 이상 증가한 4천337t을 기록했습니다. 4월에는 437t으로 급감했다가 5월에는 다시 1천451t으로 세 배 이상 증가했습니다.

올해 1월부터 5월까지 북한에 수출된 정제유는 총 1만66t으로 집계됐습니다.

중국이5천921t, 러시아가 4천148t을 각각 북한에 제공했다고 신고했습니다. 중국과 러시아 외에 북한에 석유제품을 공급했다고 신고한 나라는 없습니다.

올해 북한에 수출된 정제유를 배럴로 환산하면 8만532 배럴로, 상한선의 15% 수준에 머물고 있습니다.

Article source:
유엔 “중국, 올 1~5월 북한에 정제유 5,921t 공급”…유엔 제재 상한선 크게 못 미쳐
Kim Hyun-jin
Voice of America
2018-07-06

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A Chinese ban on North Korean imports damages the North Korean economy

Tuesday, March 13th, 2018

Institute for Far Eastern Studies (IFES)

The North Korean economy is expected to face serious difficulties due to China’s ban on imports from North Korea. Having analyzed China’s sanctions against North Korea, KOTRA’s Korea Trade Center in Shenyang recently suggested that while North Korea depends overwhelming on China for its export, its exports are expected to plummet due to China’s measures.

After Pyongyang made its fifth nuclear test on February 18, 2017, China joined the sanctions imposed by United Nations Security Council (UNSC) Resolution 2321 and halted its import of North Korean coal until December that year.

Consequently, China’s import of North Korean coal was reduced by 60 percent compared to the same period in the previous year.

Furthermore, China imposed a complete ban on the import of coal, iron ore, lead and fishery products from North Korea, in accordance with the sanctions by UNSC 2371 adopted in response to North Korea’s IBCM launch on August 14, 2017.

Moreover, in response to North Korea’s sixth nuclear test on September 22 and the launch of an ICBM on January 5, 2018, China put a restriction on the export of refined oil, crude oil and refined petroleum products to North Korea.

The restriction on the export of refined petroleum products is expected to be a serious blow to the North Korean industry. Keeping China’s exports below 10 percent of total North Korean demand for the products, the new sanction will hit the North Korean economy across the board, ranging from industry, transportation, cargo transportation and power supply.

In addition, North Korean households, which have lower priority in power supply, would face increasing difficulties in getting electricity and heating. In the meantime, North Koreans may not suffer greatly from the shortage of oil because China has limited its export of crude oil to North Korea to its annual level of supply.

North Korea’s foreign exchange shortage is also expected to be aggravated following the shutdown of North Korean businesses in China and the repatriation of North Korean workers, both of which have been main sources of funds for the North Korean leader.

On September 28, 2017, the Chinese Ministry of Commerce announced that all existing North Korean businesses and joint ventures in China, including those managed solely by North Korean companies and individuals, should be closed by January 9, 2018.

In accordance with the notification of closure, the Shenyang Municipal Bureau of Industry and Commerce Administration issued a letter of notification to North Korean businesses and joint ventures in the city, leading to the shutdown of the Chilbosan Hotel and several North Korean restaurants.

In addition, North Koreans currently employed in China are allowed to remain while they have a valid visa, but have been asked to return to North Korea upon expiration of their visa.

Although the Chinese Ministry of Commerce completely prohibited the import of North Korean textile products on September 22, 2017, the import ban has created little export-ban effects to date, because cargo that has not completed the customs clearance procedure is excluded from the ban.

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Gas prices volatile in Pyongyang as tensions run high

Monday, September 25th, 2017

By Benjamin Katzeff Silberstein

DailyNK reports:

Following the country’s sixth nuclear test on September 3, fuel prices in North Korea have been subject to unusual volatility. The price of fuel soared in April and rose again slightly in September. But it has been reported that gasoline coupons have not been influenced by the price fluctuations, and are being actively traded on the North Korean black markets.
“As fuel prices have been fluctuating, gasoline coupons have become popular items in Pyongyang’s black markets. The merchants who previously bought dozens of coupons have started offering them for sale as the prices began to rise,” a source familiar with North Korean affairs in China told Daily NK on September 20.
And opportunities are ripe for arbitrage:
According to the source, gasoline can be purchased for the same price at the time that the coupon was issued. For example, if a 15 kg gasoline coupon was previously purchased for 30 USD, the same amount of fuel can be obtained even if the price rises suddenly to 35 USD. In this way, the dealers can make a profit by selling the coupon for 32 USD.
“The coupons are especially popular when the gasoline prices are unstable. The merchants are selling the coupons on the black markets as the fuel prices rise,” the source said.
Originally, gasoline coupons were issued from North Korea’s central government organizations and were sold to officials or foreign embassy staff in Pyongyang. But now the foreign currency earning companies are issuing the coupons themselves. The authorities have actively encouraged new strategies to earn foreign currency.
The black market is ever the present factor:
These foreign currency earning companies are said to be profiting from the fluctuating fuel prices, regardless of efforts to limit the sales of coupons.
“If the authorities move to restrict the sales of coupons, the companies will just sell the coupons on the black market. Despite strong sanctions being imposed on fuel, the major companies that are still holding a large amount of fuel become more powerful in times of fuel crisis,” a source in South Pyongan Province explained.
“Even the Pyongyang cadres have no choice but to purchase coupons on the black market.”
Full article here:
Volatile gasoline prices in Pyongyang
Seol Song Ah
Daily NK
2017-09-25
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Gasoline prices in North Korea up by 52 pct in first week of April

Friday, April 8th, 2016

By Benjamin Katzeff Silberstein

Daily NK reports some interesting (albeit anecdotal) price data from North Korea:

Firm sanctions imposed by the UN on North Korea have now been in effect for over a month. Although rice prices and the exchange rate in North Korean markets have remained relatively stable, the price of fuel has skyrocketed.

On April 4, Daily NK spoke with a source in Ryanggang Province who confirmed these facts. The price of 1 kilogram [the kilogram is the standard measurement of gasoline and diesel fuel in North Korea, though the liter is often used colloquially] of gasoline, which was 7,000 KPW [0.86 USD] at the end of March, increased in the first week of April to 10,700 KPW [1.32 USD].

This represents a 52 percent price increase in just a week.

Sources in North Hamgyong Province and Pyongyang have corroborated this news, reporting that prices in their regions are reflecting the trends prevailing in Ryanggang Province.

Diesel fuel prices have increased in tandem with gasoline. In Hyesan, 1 kilogram of gasoline is going for 6,350 KPW [0.78 USD] at the markets, a 1,000 KPW [0.12 USD] increase over last month’s prices.

This is a much smaller prices change — an 18 percent increase — but still significant.

A major factor behind the price spike is thought to be the large-scale construction projects that are underway, the source said, further noting that, “Workers mobilized for construction projects are saying that their worries are increasing at the same rate as fuel prices.”

Concerns that these prices will only continue to rise are widespread. Of particular importance, because planting season is just around the corner, farmers are also trying to procure fuel supplies for themselves, increasing demand and further exacerbating the situation. This has been made more difficult by the fact that fuel previously supplied to the markets through smuggling is comparatively harder to come by due to intensified crackdowns on these activities.

Furthermore, April and May are the prime months for catching mackerel, and June is when squid season gets underway. In anticipation of this busy period, fishermen are anxious to get their hands on fuel. “As the saying goes,” the source said, “fishing is survival, and the fishermen anticipate huge losses this year if they fail to secure an adequate supply of fuel right now.”

Citizens are divided over whether or not the sanctions are responsible for driving the increase in fuel costs, the source added. Although some believe that this is the sanctions beginning to show their effects, others are blaming the military for siphoning off supplies, pointing out that prices for other goods have remained constant.

As is often the case, it seems the price increases cannot be attributed to one single factor such as the sanctions. Aside from the factors cited above, it would not be surprising if expectations play a role and hoarding has increased, out of anticipation that sanctions may sooner or later impact prices.

Full article here:
April brings fuel price hike
Kang Mi Jin
Daily NK
2016-04-07

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An Updated Summary of Energy Supply and Demand in the Democratic People’s Republic Of Korea (DPRK)

Tuesday, April 15th, 2014

The Nautilus Institute has published a report on energy supply in the DPRK by David F. von Hippel and Peter Hayes. You can read it here.

Here is a small section of the paper:

Overall energy use per capita in the DPRK as of 1990 was relatively high, primarily due to inefficient use of fuels and reliance on coal. Coal is more difficult to use with high efficiency than oil products or gas. Based on our estimates, primary commercial energy[19] use in the DPRK in 1990 was approximately 70 GJ per capita, approximately three times the per capita commercial energy use in China in 1990, and somewhat over 50 percent of the 1990 per capita energy consumption in Japan (where 1990 GDP per-capita was some ten to twenty times higher than the DPRK). This sub-section provides a brief sketch of the DPRK energy sector, and some of its problems. Much more detailed reviews/estimates of energy demand and supply in the DPRK in 1990, 1996, and particularly in 2000, 2005, and 2008 through 2010, are provided in later chapters of this report.

The industrial sector is the largest consumer of all commercial fuels—particularly coal—in the DPRK. The transport sector consumes a substantial fraction of the oil products used in the country. Most transport energy use is for freight transport; the use of personal transport in the DPRK is very limited. The residential sector is a large user of coal and (in rural areas, though more recently, reportedly, in urban and peri-urban areas as well) biomass fuels. The military sector (by our estimates) consumes an important share of the refined oil products used in the country. The public/commercial and services sectors in the DPRK consume much smaller shares of fuels supplies in the DPRK than they do in industrialized countries, due primarily to the minimal development of the commercial sector in North Korea. Wood and crop wastes are used as fuels in the agricultural sector, and probably in some industrial subsectors as well.

Key energy-sector problems in the DPRK include:

*Inefficient and/or decaying infrastructure: Much of the energy-using infrastructure in the DPRK is reportedly (and visibly, to visitors to the country) antiquated and/or poorly maintained. Buildings apparently lack significant, and often any, insulation, and the heating circuits in residential and other buildings for the most part apparently cannot be controlled by residents. Industrial facilities are likewise either aging or based on outdated technology, and often (particularly in recent years) are operated at less-than-optimal capacities (from an energy-efficiency point of view).

*Suppressed and latent demand for energy services: Lack of fuels in many sectors of the DPRK economy has apparently caused demand for energy services to go unmet. Electricity outages are one obvious source of unmet demand, but there are also reports, for example, that portions of the DPRK fishing fleet have been idled for lack of diesel fuel. Residential heating is reportedly restricted in the winter (and some observers report that some public-sector and residential buildings have not received heat at all in recent years) to conserve fuel, resulting in uncomfortably cool inside temperatures.

The problem posed by suppressed and latent demand for energy services is that when and if supply constraints are removed there is likely to be a surge in energy (probably particularly electricity) use, as residents, industries, and other consumers of fuels increase their use of energy services toward desired levels. (This is a further argument, as elaborated later in this report, for making every effort to improve the efficiency of energy use in all sectors of the DPRK economy as restraints on energy supplies are reduced.)

*Lack of energy product markets: Compounding the risk of a surge in the use of energy services is the virtual lack of energy product markets in the DPRK. Without fuel pricing reforms, there will be few incentives for households and other energy users to adopt energy efficiency measures or otherwise control their fuels consumption. Recent years have seen limited attempts by the DPRK government to reform markets for energy products. Some private markets exist for local products like firewood, and some commercial fuels have in recent years reportedly been traded “unofficially” (on the black market), but for the most part, energy commodity markets in the DPRK essentially do not exist[20]. Energy consumers are also unlikely, without a massive and well-coordinated program of education about energy use and energy efficiency, to have the technical know-how to choose and make good use of energy efficiency technologies, even when and if such technologies are made available.

The DPRK’s energy sector needs are vast, and at the same time, as indicated by the only partial listing of problems many of these needs are sufficiently interconnected as to be particularly daunting to address. The DPRK’s energy sector needs include rebuilding/replacement of many of its power generation and almost all of its substation equipment, repair, replacement, and/or improvement of coal mine production equipment and safety systems, updating of oil refineries, improvement or replacement of most if its energy-using equipment, including coal-fired boilers, electric motors and drives, transport systems, and many other items, modernization of energy use throughout the country, rebuilding of the DPRK forest stocks, and a host of other needs. As one example of the interrelations of energy problems in the DPRK, renovating the DPRK’s coal mining sector is made more difficult because coal mines lack electricity due to electricity sector problems, and electricity generators in some cases have insufficient coal to supply power demand because of coal mine problems and problems with transporting coal to power plants.

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More measurement of the importance of markets in the DPRK: residential and public sector energy consumption

Monday, February 3rd, 2014

According to Yonhap (via the Korea Herald):

A fuel ration system in North Korea seems to have been dismantled due to a chronic fuel shortage, a report said Monday.

The report by the state-run Korea Energy Economics Institute (KEEI) said a majority of households in North Korea secure their fuel for heating and cooking on the black market or by themselves, hinting that the country’s fuel ration system might have been scrapped.

The report was made on the basis of data compiled from a poll of 350 North Korean defectors who fled the country after 2011.

According to the report, 51.1 percent of the North’s households bought their heating and cooking fuel on the market, with 42 percent gathering their fuel, such as firewood, by themselves.

Only 6.8 percent of them were provided with fuel for heating and cooking through the country’s fuel ration channel.

The energy consumption of a North Korean household was estimated at 0.291 tons of oil equivalent (TOE) as of 2011. The TOE is a unit of energy which is equivalent to the amount of energy released by burning one ton of crude oil.

The consumption of energy gaining from coal briquettes accounted for 36.8 percent of the total, reaching 0.107 TOE, followed by wood with 0.069 TOE, electricity with 0.038 TOE, oil products with 0.025 TOE and propane gas with 0.023 TOE.

The energy consumption for heating took up 50.9 percent of the total, amounting to 0.148 TOE.

The KEEI said a program for fuel aid to North Korea should be mapped out on the basis of exact data on the energy consumption in the North’s private sector.

You can download the full report here in Korean (PDF). Here is the web page for the Korea Energy Economics Institute.

Read the full story here:
Fuel ration seems to have been dismantled in N. Korea: report
Yonhap
2014-2-3

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China acts to curb DPRK oil imports

Sunday, October 20th, 2013

According to the Asahi Shimbun:

China is holding petroleum that was heading to North Korea from Iran in an apparent attempt by Beijing to maintain its control over Pyongyang, sources said.

According to Chinese sources, the petroleum was part of North Korea’s contract to import about 500,000 tons of condensate, a light oil, from Iran. North Korea, seeking to diversify its energy sources, started discussions on the deal last year.

The agreement was reached with the cooperation of a major Chinese state-run petroleum company.

The condensate is believed to have been shipped from Iran over a number of occasions on tankers registered to a third nation. But Chinese authorities ordered the tankers to stop when they reached the Chinese coast in the Yellow Sea this spring.

The ships were then towed to ports in Dalian, Liaoning province, and Qingdao, Shandong province. Sources said the condensate remains in those ports, which have restricted access to outsiders.

China is believed to have asked North Korea to pay about $2 million (about 196 million yen) for storage expenses.

“Once China realized that North Korea was beginning to depend on Iran for petroleum, China began using various measures to remain engaged so it can maintain its influence over North Korea,” a diplomatic source knowledgeable about relations between China and North Korea said.

Under the North Korea-Iran contract, Pyongyang is to pay Tehran for the condensate, but the condensate itself must be first sent to a Chinese state-run petroleum company.

“Because North Korea does not have the most advanced refineries, it had to ask China to refine the condensate,” a source in the petroleum industry said.

It is unclear what legal basis China is using for holding up the shipments because condensate and other petroleum products needed for daily living are not banned under U.N. economic sanctions imposed against North Korea.

However, one source involved in the transaction said, “As part of the economic sanctions that were imposed against military actions taken by North Korea, inspections were carried out by Chinese authorities, which asked that the petroleum be kept at the port.”

Until now, China is said to have provided about 80 percent of the petroleum used in North Korea. The main means of transport were through a pipeline that runs along the Yalu River between the border of the two nations as well as by ship.

According to Chinese customs statistics, the export volume was about 520,000 tons a year.

“Not only has a ban on petroleum export shipments been imposed by China, but the total import volume through the pipeline has also been reduced to one-third the level of the same period of the previous year,” a source involved in trade between China and North Korea was told by a North Korean government source in September.

China remains North Korea’s biggest backer, even with the contract with Iran.

Read the full story here:
China holding up shipment of Iranian petroleum to North Korea
Asahi Shimbun
Koichiro Ishida
2013-10-20

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DPRK’s Minister of Trade releases information on recent foreign economic cooperation at forum in China

Thursday, September 12th, 2013

Institute for Far Eastern Studies (IFES)
2013-9-12

After North Korea’s launch of a long-range rocket in December 2012 and third nuclear test in February 2013, China endorsed UN sanctions against North Korea. Consequently, North Korea appears to be increasing its economic cooperation with Mongolia and Russia.

On September 6, the 7th annual Northeast Asia joint high-level forum was held in Changchun (Jilin Province), China. Ku Bon Tae of the DPRK Ministry of Trade is reported to have been present and to have delivered a presentation on North Korea’s recent economic cooperation activities.

Ku stated, “Currently, cooperation between North Korea and Mongolia is making positive progress,” and “the international freight transport coordination issue and Mongolian corporate investments, telecommunications and other cooperation issues at the Rason Special Economic Zone are at the final stages of agreement.”

He added, “We hope more Northeast Asian nations will actively take part in the Rason Special Economic Zone.”

In May, a Mongolian oil companies HB Oil JSC acquired 20 percent stake in North Korea’s state-run Sungri oil refinery. In July, the two countries signed an agreement on information and communication cooperation and exchanges. In addition, Mongolian experts in the field of livestock are said to be involved in North Korea’s Sepho tableland (Gangwon Province) reclamation project, which seeks to create a large stockbreeding complex.

As for economic cooperation with Russia, the Khassan–Rajin railway — part of an international container rail transport line connecting Russia and North Korea and linking Northeast Asia to Europe — has its opening ceremony scheduled for this month after having received extensive reconstruction. Russia also has a long-term lease on Rajin Port’s pier No. 3. Russia has been renovating the pier, and renovations are expected to be completed by the end of this year.

North Korea and Russia plan to develop Khassan–Rajin rail line and Rajin Port in order to transport cargo from Asia to Europe: as containers arrive at Rajin Port, they are moved to the Khassan-Rajin railway and then transferred to the Trans-Siberian Railway (TSR), headed for Europe.

Ku further added, “After the projects are completely finished friendly cooperation between Russia and North Korea and international transport pathway will be opened connecting Asia to Europe through the development of economic and trade relations between the two countries.”

In Ku’s speech, the public economic cooperation with regards to China was covered briefly, and exclude the recent progress made. He commented only on the establishment of Joint Management Committees in Rason and Hwanggeumpyeong economic zones and that banks of the two countries are in the process of negotiating the usage of Chinese renminbi as the currency of trade.

Ku emphasized, “As with our past, our Republic hopes to promote independence, peace and friendship between Northeast Asian countries in the future, based on our foreign policy and will make every effort to further develop and expand this friendly cooperative relationship.”

The 9th China–Northeast Asia Expo opening ceremony was also held (in Changchun) on the same day as the forum. Political and business leaders from China, South and North Korea, Russia, Japan, and Mongolia were present at the event.

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