Russian President Vladimir Putin meets with North Korea's leader Kim Jong Un in Vladivostok, Russia, on April 25, 2019. (Sputnik/Alexei Nikolsky/Kremlin via Reuters)

Speculation has emerged that North Korea could buy low-priced crude oil from Russia as Pyongyang and Moscow grow closer in the wake of the Russian invasion of Ukraine. However, experts say that even if North Korea imports Russian oil, they are unlikely to get it as cheaply as the oil they receive from China.

Troy Stangarone, senior director and fellow at the Korea Economic Institute of America, recently told Daily NK that North Korea is unlikely to import crude oil from Russia. He said North Korea has only one refinery where it could refine Russian crude, and that facility has not been in operation for years.

He said if a refinery has been out of operation for a while, it needs retooling and investment to restart, and re-achieving normal efficiency takes a long time. Because of this, North Korean authorities would have a tough time importing Russian crude.

However, Stangarone said he could not completely discount the possibility of North Korea importing pre-refined gasoline or diesel.

An overseas expert on the North Korean economy who requested anonymity said that because Pyongyang has experience in illegally importing Russian refined oil using ship-to-ship transfers on the high seas, North Korea could import oil from Russia using similar methods if they need to.

In fact, Russia reported to the UN Security Council Sanctions Committee on North Korea that it exported 30,180 tons of refined oil to North Korea in 2019.

At the time, China reported that it exported just 22,730 tons of refined oil to North Korea, making Russia the biggest supplier of refined oil to North Korea that year.

However, with international oil prices skyrocketing, North Korea is unlikely to benefit in terms of price even with Russian oil, which has fallen in price relatively speaking.

In a telephone conversation with Daily NK, Russia-born Korea expert Andrei Lankov, a professor at Kookmin University, said that even if Russia and North Korea bolster their economic cooperation, that cooperation would take the form of mutual trade rather than freebies. He said it is highly unlikely Russia would provide North Korea with refined oil for free or at prices much lower than international oil prices.

He believes that China could provide very cheap crude or refined oil to North Korea because China’s economy is much larger than Russia’s and Beijing places great political and strategic value on North Korea. Russia, on the other hand, suffers economic instability and risks going bankrupt due to international sanctions in the wake of its invasion of Ukraine, so it has no reason to provide cheap oil to the North.

Stangarone said if North Korea imports refined oil from Russia, Pyongyang must consider two factors: how much of a discount the country could receive, and the ease in which the oil could be obtained. 

He said even though Russia is exporting cheap oil to India, New Delhi is getting discounts of just USD 25-35 a barrel. With international oil prices over USD 100 a barrel, North Korea would find Russian oil imports burdensome, even if Moscow quotes them a cheap price.

In particular, with Russia experiencing serious foreign exchange shortages due to Western sanctions, North Korea is not an attractive customer.

Nevertheless, economic cooperation between North Korea and Russia is likely to expand. 

The Russian Foreign Ministry said on Mar. 22 that Deputy Foreign Minister Igor Morgulov had met North Korea’s ambassador to Russia, Sin Hong Chol, with the two discussing “issues of the development of bilateral relations in the context of changes taking place in the international arena.”

This suggests that since both North Korea and Russia are under international sanctions, they can expand trade even if they are less-than-perfect trading partners.

North Korea has few economic carrots to offer Russia since the economies of the two counties are largely incompatible. However, with Ukrainians and Central Asians leaving Russia due to the war, North Korea could offer to dispatch workers.

Kookmin University’s Lankov said North Korea places little value on most of what North Korea can export, but with labor becoming a major issue in Russia, North Korea could expand its labor dispatches beyond construction workers and loggers to include female light industrial workers. He said it remains unknown what economic linkages were discussed during recent high-ranking talks between North Korea and Russia, but labor dispatches must have been one of them.

Please direct any comments or questions about this article to dailynkenglish@uni-media.net.

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Seulkee Jang is one of Daily NK's full-time journalists. Please direct any questions about her articles to dailynkenglish@uni-media.net.