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Would China actually resort to banning crude oil exports to NK?

[As Heard in North Korea]
Choi Song Min  |  2017-05-16 18:10

"As Heard in North Korea" articles contain radio programming content broadcast by Unification Media Group [UMG], an independent multimedia consortium targeting North Korean citizens.

Many in the international community have stressed the significance of China's role in resolving the North Korea issue, and the Chinese government appears to be seeking ways to curtail Pyongyang’s nuclear threats. In particular, China’s state media reported that Beijing was contemplating suspending crude oil exports to North Korea. Such a ban on oil exports would deal a severe blow to the North Korean regime. Daily NK’s reporter Choi Song Min is here to shed more light on the effect of China's potential plans to ban oil exports to the North.

Firstly, what are the channels by which North Korea imports crude oil from China? And what percentage of the North's overall crude oil imports come from China?

An overwhelming proportion of its crude oil is fed to North Korea via imports from China. The oil predominantly arrives through pipelines located near China’s Liaoning and Dandong provinces, which are in close proximity to North Korea’s North Pyongan Province. An agreement was made in the past between the two nations whereby North Korea would provide 400,000 kilowatts of electric power to the provinces located in the North-eastern regions of China in return for crude oil imports.

The electric power supplied to China is supposed to come from the Supung Hydroelectric Plant in North Pyongan Province near the Amnok River, with approximately 70% of the total output delivered to China. However, due to the dilapidated facilities and falling power output, coal exports were offered as an alternative in return for about 300,000 tons of crude oil imports. Crude oil imports from China account for approximately 90% of oil consumption, with the remaining quota fulfilled by imports from Russia and Middle Eastern countries, namely Iran.

Then it is no exaggeration to claim that the North is almost totally dependent on Chinese crude oil imports. What are your views on the impact that North Korea will face if China bans crude oil exports to the North?

Products made from refined crude oil are pivotal in all spheres of the North's industry. Similar to the South, diesel and petroleum oil are essential to power the factories and the armed forces. If China restricts or totally bans crude oil exports to North Korea, there will be serious repercussions for the North's military defenses and the industrial economy as a whole. 

Let's take a more in-depth look at the various sectors. What are the potential repercussions in relation to the North's military forces?

The biggest problem that will result from restrictions will be in the field of national defense. Kim Jong Il claimed that modern warfare hinged on ammunition and fuel. Fuel is essential for the rapid and versatile deployment of military forces. North Korea is currently flaunting their nuclear missile technology and declaring that they are ready to start a war in the face of pressure and sanctions by the United States. However, without crude oil imports from China, North Korea will not be able to deploy key forces like artillery units including tanks and armored vehicles, or naval vessels in the East and West Sea.

They will also be unable to deploy military troops, as it would be impossible to fuel the logistical operations needed to support its million-strong army.

Let's turn our attention to the domestic economy. What would be the detrimental effects of oil shortages on civilian lives?

The Ponghwa Chemical Factory will be most affected by crude oil shortages, leading to severe repercussions for civilians. Since the 1980s, the Ponghwa Chemical Factory has served as a crude oil refinery, producing essential products like petroleum, diesel, liquefied gas, chemical fertilizers and other necessities. Crude oil shortages will lead to shortages in chemical fertilizers, which will have an enormous negative impact on the agricultural sectors. Moreover, the transportation sector will be completely immobilized. In the North, transportation is essential for production and virtually the entire industry would come to a standstill without oil. 

Since the military forces are the bastions of the regime and the entire Kim Jong Un regime could come under threat, what would be the implications for the various political departments like the Korean Workers’ Party?

When the United States imposed sanctions on Cuba, Fidel Castro ordered officials to ride bicycles instead of drive automobiles. Similarly, if China restricts crude oil exports to North Korea, even high ranking officials will be riding bicycles just like the average resident, leading to dissent among the officials. Additionally, the special allotment of oil assigned only to Pyongyang residents would be curtailed, which could have a destabilizing effect on the entire regime.  

Surely there must be some hidden reserves of oil to provide for emergencies like war or a sudden cut in oil imports? Could you give us a clearer picture of the oil reserves?

The North Korean regime has officially maintained a 3 month's strategic supply since the end of the Korean War. However, a large portion of the strategic reserves were used during the formal military inspections and parades ordered by Kim Jong Un to flaunt his power and accomplishments. According to sources, there are now less than 30% of the strategic reserves left. Moreover, the reserves of crude oil have to be cycled periodically, or the cetane and octane values will fall, leading to issues in manufacturing petroleum and diesel from the crude oil. In other words, if the crude oil is stored for too long, it degrades. 

It seems that North Korea will have major issues if China restricts their oil supply. Won't the North turn to Russia or middle-east countries to intermittently resolve an oil crisis? 

Yes, they definitely will. The key player will be Russia. The North has always played on the sentiments of China and Russia, engaging the field with both countries according to the ongoing state of affairs. In the face of the recent collusion between the United States and China applying more pressure on the North, North Korea immediately turned to establishing better economic relations with Russia. In particular, the North established a regular travel route to Russia and started mass imports of Russian diesel and petroleum through oil tankers via the ports of Rason, Chongjin, and Munchon. Furthermore, Kim Jong Un has been sending congratulatory messages to Syria and other middle-eastern countries to establish amicable relations for future oil imports from these countries. 

Crude oil export restrictions from China will deal a severe blow to the North Korean leadership, military forces and governmental organizations. However, China has always resisted the idea of causing instability for the North Korean regime. Do you think China will really go through with their plans to restrict crude oil exports?

China does not wish for a total disintegration of the North's regime. North Korea has always been a strategic breakwater against the influences of the United States and Western influences. It will definitely not want to see the stars and stripes flying over the Amnok. 

Hence, China will seek to bring the North into line, and not attempt to totally ruin the current regime. They will maintain a show of imposing restrictions against the North so as not to compromise their standing in the international community, but it will mostly be a superficial show of slight restrictions paired with the maintenance of ongoing relations with the North.

*Edited by Lee Farrand

 
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2017.04.25
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