Caught Oil-handed

Earlier in the week, China detained a batch of Iranian petroleum shipment to North Korea. This particular shipment is part of an ongoing contract between North Korea and Iran to import about 500,000 tons of condensate (a light oil). The condensate was shipped on tankers registered to a third nation, and have been distributed throughout multiple occasions.

Chinese authorities stopped the shipment at its coast of the Yellow Sea, and the ships were subsequently towed to Dalian, Liaoning and Qingdao, Shandong. China recently asked North Korea to pay a two-million-dollar storage expense. The detainment is speculated to be China’s measure of remaining in relative control of its neighbor since North Korea became increasingly dependent on Iran for petroleum.

The North Korean-Iranian contract entails North Korea paying Tehran for the condensate, but the oil must first be sent to a Chinese state-run petroleum company. North Korea and Iran are both under U.N. sanctions due to their nuclear agenda, which made the two a match when North Korea sought to diversify its energy providers.

U.N. economic sanctions against North Korea do not include banning condensate and other petroleum products that are prevalent to daily living. However, after North Korea’s third nuclear test earlier this year, U.N. Security Council unanimously imposed additional sanctions—member nations were obligated to inspect cargo to North Korea if there were suspicions of banned goods.

In the past, China provided 80% of North Korea’s petroleum, predominantly through a pipeline that runs along the Yalu River and shipments. Since North Korea’s threats of attack this year, China put a ban on petroleum export shipments and the supply level of the pipeline was reduced to a third of what it previously was.  

The petroleum contract between North Korea and Iran is likely to be a part of a larger agenda, as North Korea looked to build new oil refineries, and urged Mongolia to invest in current ones.

I can’t help but wonder: what happens when failing states—states that are considered dangerous outliers—start banding together? 

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One thought on “Caught Oil-handed

  1. Pingback: Failed States Symphony: اصدقاء (friends) | Singing a Duet with Kim Jong-Un

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