PETER HAYES and DAVID VON HIPPEL. North Korea – How crucial are oil imports for its nuclear and missile programs?Sep 14, 2017
A recent report by the Nautilus Institute by Peter Hayes and David von Hippel suggests that the impact of strong sanctions against oil imports by North Korea from China may not have a telling or early impact on its nuclear and missile development program.
As the calls for stronger sanctions against North Korea – especially on oil imports from China and Russia – ratchet up, so does the debate about their potential effectiveness. China and Russia have indicated that they will not support the tougher sanctions in the draft which the United States is circulating in the Security Council. A report just released by the Nautilus Institute, which follows the situation in North Korea very closely, raises some very pertinent issues on this question. While the Nautilus Institute emphasised that its report needed further detailed study, it provided some food for thought about the likely impact of oil sanctions.
In brief it reported :
Current Oil Supply and Use in the DPRK
- estimates total oil use in DPRK in 2017 (assuming no sanctions) would have been the energy equivalent of about 850,000 tonnes of crude oil imports
- DPRK refined products use is dominated by the industry, transport, and military sectors
- Expanded use of diesel fuel for power generation, mostly not associated with the electricity grid, but diesel generators by individual businesses, markets, and other organizations to substitute for intermittent grid power supplies
- Greater use of oil products for transportation, especially in private vehicles
- Likely expanded use of LPG for cooking, particularly in wealthier households in Pyongyang
- Greater imports of refined products, probably with most of the increase in imports from Russia, either directly or indirectly through companies in Singapore and elsewhere
- Chinese customs reports of Chinese crude oil shipments to the DPRK have been irregular of late, but best guess is that Chinese exports have not changed much in recent years on an annual basis.
Military Use and Stockpiles
In 2010, by Nautilus estimate, DPRK military accounted for about 31%, say one-third, of total DPRK oil use, closer to 40 percent of gasoline and diesel use, and nearly half of the use of kerosene and jet fuel (lumped together, because they are similar products). Based on detailed analysis of DPRK military energy use, Nautilus estimated that the DPRK can fight for about a month before it will run out of fuel; and it likely has stockpiles sufficient for a year of routine, non-wartime usage. It assesses that DPRK military use (about one-third of the estimated annual use) can be removed from analysis on assumption that this is already buffered by stored products for at least a year against an energy supply cut-off by China and/or Russia.
That leaves the other two-thirds of oil end-use (roughly the energy equivalent of 585,000 tonnes of crude oil) immediately vulnerable to a supply cut-off. Add to that the equivalent of an additional estimated 510,000 tonnes of crude oil used in electricity generation (most in diesel generators) meaning that the equivalent of over 1 million tonnes of crude oil demand might be vulnerable to a cut-off.
These basic estimates suggest the following with regard to even massive (say 50 percent) Chinese oil export cuts to the DPRK:
- The DPRK could quickly cut its non-military use by about 40% of its annual oil use with a variety of end use reduction and substitution measures.
- There will be little or no immediate impact on the Korean Peoples’ Army’s (KPA’s) nuclear or missile programs.
- There will be little or no immediate impact on the KPA’s routine or wartime ability to fight due to energy scarcity, given its short war strategy and likely stockpiling.
- The DPRK has the ability to substitute coal and electricity for substantial fractions of its refined product use, as well as its heavy fuel oil use (the product of oil refining) for heat production.
- The immediate primary impacts will be on welfare; people will be forced to walk or not move at all, and to push buses instead of riding in them. There will be less light in households due to less kerosene, and less on-site power generation. There will be more deforestation to produce biomass and charcoal used in gasifiers to run trucks, leading to more erosion, floods, less food crops, and more famine. There will be less diesel fuel to pump water to irrigate rice paddies, to process crops into foodstuffs, to transport food and other household necessities, and to transport agricultural products to markets before they spoil.
- Past experience—including extensive field observations of the DPRK populace responding to prior deprivations—suggests that even these deep cuts and resulting scarcity and welfare impacts will not lead to social instability. North Koreans mostly will obey and endure the strictures resulting from these sanctions.
- China cannot force the DPRK to the negotiating table by means of energy sanctions, and it is unreasonable to demand that it do so, at least not before the United States demonstrates incontrovertibly that it is closing on engagement of the DPRK. Indeed, such demands are highly unrealistic and reflect “strategic confusion” in American policy towards the DPRK.
- If such demands were heeded and acted on now, the results would be counterproductive with respect to the overarching primary goals of avoiding war, resuming negotiations, and ending the North Korean nuclear threat.
Peter Hayes is Director, Nautilus Institute and Honorary Professor at the Centre for International Security Studies, University of Sydney. David von Hippel is Nautilus Institute Senior Associate.
The full Nautilus report can be found at http://nautilus.org/napsnet-special-reports/sanctions-on-north-korean-oil-imports-impacts-and-efficacy/