ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Trump-Kim Summit

North Korea's oil smuggling blows past import cap: UN report

Ship-to-ship transfers become increasingly sophisticated

This photo provided by Japan's Maritime Self-Defense Force shows an apparent ship-to-ship transfer involving a North Korean tanker in the East China Sea.

HANOI -- North Korea likely received far more petroleum in 2018 than allowed under United Nations sanctions, with Russia and China appearing to look the other way on illicit transfers of oil at sea.

Pyongyang was permitted to import 500,000 barrels of oil, but apparently exceeded that amount through smuggling alone, Nikkei has learned, based on a recent internal report by an expert panel under the U.N. Security Council's North Korea sanctions committee. The report adds to a series of documents noting such activities.

The U.N. report cited 148 instances of ship-to-ship oil transfers involving North Korea from January to August. Even if the ships carried just one-third of their capacity, the report said, Pyongyang would have obtained the equivalent of 830,000 barrels of oil from those activities alone. The import cap was imposed in December 2017 in response to the North's testing of intercontinental ballistic missiles.

Moscow and Beijing have made no secret of their wish for an easing of sanctions on Pyongyang. With the second summit between U.S. President Donald Trump and North Korean leader Kim Jong Un set to begin Wednesday, fears are building that warmer ties between the two nations could accelerate the quiet breaking of sanctions.

Pyongyang employs increasingly sophisticated tactics in its at-sea transfers, the report said, such as falsifying ship registrations, using miniature craft and turning off automatic identification systems whose use is required under international treaties. The family bank accounts of some North Korean diplomats have been linked to smuggling, the report also said.

The increase in smuggling stems partly from what a South Korean expert alleged was a "posture of tacit consent" in Beijing. Sources tied to Japanese-American diplomacy described a rise since last year in what appeared to be ship-to-ship smuggling in China-administered parts of the Yellow Sea, where Tokyo and Seoul would have trouble keeping watch. Such incidents also have grown notably in the South China Sea compared with the East China Sea, on which Japan's Maritime Self-Defense Force keeps a sharp eye.

Members of North Korea's growing class of privately wealthy people -- known as tonju, or "money masters" -- also appear to be doing business with Russian enterprises. Washington-funded media outlet Voice of America has reported that Moscow provided Pyongyang with large volumes of oil in December.

Russia told the U.N. sanctions committee that it supplied North Korea with about 7,000 tons of oil in December alone. Its reported supply volume combined with China's makes for over 48,000 tons sent during 2018 as a whole -- about 80% of the annual import limit when converted into barrels.

North Korea's military appears to control petroleum sourced from China, with Russian-made fuel said to account for most of what reaches the market. The import cap initially caused disruption in the North, with domestic oil prices swinging wildly, but a stable supply from smuggling appears to have helped restore calm.

Yet Pyongyang, apparently sensing that sanctions may tighten further, has instructed citizens to cut back on fuel. Rodong Sinmun, the mouthpiece of the North's ruling Workers' Party, on Saturday published a call from Kim to save electricity. The ruler said efforts by hostile forces to hinder North Korea's actions via sanctions have hindered the country's prospects.

At his summit with Trump this week, Kim likely will press for concessions such as lighter sanctions in return for progress toward North Korean denuclearization. Though the U.N. sanctions that cap oil imports are not likely to be lifted anytime soon, the North may be counting on a rapprochement between Trump and Kim fostering even more tacit slack toward such sanctions evasion as the at-sea transfers.

South Korea has joined Russia and China in favoring lighter sanctions on Pyongyang, with President Moon Jae-in recently urging Trump to approve inter-Korean economic cooperation.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more