Tag: oil

What Would Chinese Suspension of Oil Imports Do to North Korea?

| January 19, 2016

I have always said that the Chinese have the power to bring the Kim regime into line if they wanted to.  The biggest card the Chinese could use against the Kim regime is to indefinitely suspend oil shipments.  They won’t do this though because they fear the collapse of the Kim regime more than they fear them developing nuclear weapons:

north korea nuke

If China were to pull the plug on its oil supply to North Korea as a countermeasure against Pyongyang’s fourth nuclear test, what kind of impact would it have on the country? Most agree that a halt in oil would trigger a ‘mass oil panic’ across the Party, military, and state, crippling all agencies, given that the North currently imports more than 90 percent of its oil from its neighbor. In an event such as this, a still young leadership that lacks stability would not be able to hold up for a week, according to experts.

The oil that goes into the North either after for free or at a cost first goes to a storage facility in Baekma, North Pyongan Province (near Sinuiju) and is stored there until being supplied to state agencies, transport-related factories, and military bases, which have priority. The main route of supply is through the pipeline that runs from China’s Dandong to the North’s Baekma. The first area this stored oil is then sent to is Pyongyang by train and truck after which it is delivered to main Party agencies, transport, and shipping bodies.

Next in line is Nampo as well as ports and military bases near the west coast. The supply in Baekma is also transported to another storage facility in Munchon on the east coast, which provides for state enterprises, agencies, and military bases in that area. In short, oil from China powers nearly all of the North’s state entities, military facilities, and factories, explaining why cutting off that supply would grind the country to a halt.

A North Korean defector who once worked within the oil supply chain speculates the suspension would create conditions that are so bad Kim Jong Un would be desperate to restore the supply. Although the North has a three-month emergency supply, that is reserved for times of war and would therefore be untouchable.

The freeze would disrupt operations within the Central Party, related agencies, administrative bodies, and the military. Cadres of all affiliations would face no heat in their offices, making it hard to work in a normal capacity, and their movements would also be restricted as there would be no gasoline or diesel to run their cars. Workers would also not have a means to get around, likely shuttering state agencies and factories.  [Daily NK]

You can read more at the link.

Satellite Imagery Shows North Korea Still Receiving Oil Imports from China

| July 11, 2015

I always figured the Chinese would just reduce their oil exports to North Korea to make them feel a little pain and show their displeasure with North Korea.  I never believed they would cut off the exports entirely because of the effect it would have on regime stability:

china north korea image

WASHINGTON, July 10 (Yonhap) — North Korea’s sole-operating oil refinery has been up and running despite a series of media reports that China halted crude exports to the impoverished communist neighbor amid strained relations last year, a U.S. expert said Friday.

Joseph S. Bermudez Jr., chief analytics officer of AllSource Analysis, said in a report carried by the website 38 North of the Johns Hopkins School of Advanced International Studies that the North’s Ponghwa Chemical Factory would not have been running if Beijing had halted crude exports.

Bermudez cited satellite imagery showing the refinery operational.

“Numerous reports during 2014-2015 have stated that China, North Korea’s largest crude oil supplier, did not sell it crude oil during 2014, a development that would force North Korea’s single operating oil refinery into caretaker status,” Bermudez said in the report.

“Satellite imagery from 2014 and 2015, however, reveals that the facility has remained operational, though perhaps at somewhat lower levels than in the immediately preceding years, calling into question media reports of an oil cutoff from China,” he said.

Imagery indicates activity at the factory’s rail loading and unloading facility, and construction activity within the factory, such as the building and maintenance of storage tanks and additions to several buildings, provides another indication that the facility remained operational, the expert said.  [Yonhap]

You can read the rest at the link.