The price of diesel oil and gasoline within
North Korea is declining due to the country’s increase in imports of refined
oil from China and Russia. The recent decline in international oil prices is
also affecting the fuel prices in North Korea, according to sources within the country.
“At the beginning of this month in both North Pyongan Province and South Pyongan Province, 1kg of diesel oil and gasoline were sold at 8,500 KPW [1.06 USD] and 10,500
KPW [1.31 USD], respectively” a source in Dandong, China reported to Daily NK on March
12th. “Concerns were high that North Korea would suffer from a dearth
of crude oil without imports from China, but the domestic supply of diesel and
gasoline in North Korea has been relatively stable, so the imports are just serving
to bring the price down.”
Until last year, diesel
oil in the same region went for 10,500 KPW [1.31 USD], while the price of gasoline hovered around 13,000 KPW [1.63 USD].
However, in early March, the price of diesel fell by 2,000 KPW [0.25 USD] to its current
8,500 KPW [1.06 USD] and the cost of gasoline fell by 2,500 KPW [0.31 USD], currently fetching 10,500
KPW [1.31 USD]. These reduced prices are the result of a steady stream of refined
oil pouring in from China, according to the source.
Not only that, a consistent supply of
refined oil coming in from Russia has also played a significant role in
bringing down fuel costs. “A sizeable amount of refined oil has been imported
from Vladivostok, Russia, to North Hamgyung Province’s Chongjin Port as
well as to Dancheon and Heungnam Ports,” the source said. “A significant
portion has also been funneled to the fuel gas repository in Muncheon City, Gangwon Province, with speculation that this supply will ultimately spread to Pyongyang
or South Pyongan Province.”
He added, “Much of the imported oil from
China is used by the Munitions Ministry, the Ministry of Oil, and/ or the
Military Mobilization Department. The oil used by residents, however, is
predominantly the refined oil coming in from Russia,” explaining that residents
deem Russian oil to be of better quality than the Chinese counterpart.
Other analysis gleaned from sources points
to smuggled oil across the Sino-North Korea border as a contributing factor
bringing down the oil prices. “Trading companies are using ships in the Amrok
River to smuggle in gasoline and diesel,” the source explained, noting that
rather than using the oil themselves, the companies are instead selling it to
residents for a handsome profit.
“The smuggling is not too difficult because
it is takes place through guards stationed along the border (who can be
bribed), but there are times when it does not happen smoothly, as is always a possibility
with smuggling.” He added that given the relatively unpredictable nature of
smuggling operations he would expect their overall market influence to be
decidedly less than other channels.
Interestingly, the Korea International Trade Association
in South Korea released statistics on the 4th of this month, indicating that as
of January North Korea’s imports of Chinese crude oil were nil for 13 consecutive months.
The source weighed in on the figure,
asserting that the dilapidated state of crude oil refinery facilities in North
Korea coupled with underdeveloped technology creates higher demand for imports of oil
that has already been refined. “Most of the oil entering the country is diesel
and gasoline–refined products– which is why North Korea isn’t showing any
crude oil imports,” he said.
