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Overview

Chinese Government donates 500,000 tons of crude oil in 2006

Commitments (Constant USD, 2023)$454,254,349
Commitment Year•2006Country of Activity•Democratic People's Republic of KoreaDirect Recipient Country of Incorporation•Democratic People's Republic of KoreaSector•Industry, Mining, ConstructionFlow Type•Grant

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 1, 2006

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Funding agencies

Government Agencies

  • China Ministry of Commerce

Receiving agencies

Government Agencies

  • Government of North Korea

Loan desecription

Chinese Government donates 500,000 tons of crude oil in 2006

Narrative

Full Description

Project narrative

In 2006, the Chinese Government donated approximately 500,000 tons of crude oil to the North Korean Government. 500,000 tons of oil is equivalent to 3,665,000 barrels of oil. Therefore, to estimate the monetary value of this donation ($242,073,250), AidData has taken the average price ($66.05) of a barrel of West Texas Intermediate (NYMEX) crude oil in 2006 and multiplied it by 3,665,000 barrels of oil. This crude oil donation project was supported via recurring grants from China’s Ministry of Commerce (MOFCOM) between 2000 and 2017. Since 1991, China has been North Korea's largest crude oil provider, making up 80% of its supply. Crude oil is provided to North Korea through a pipeline (known as the Dandong-Sinuiju Pipeline or Friendship Oil Pipeline) from the Daqing Oil Field, 800 kilometers north of the China-North Korea border. The pipeline, which was completed in December 1975, runs for more than 30 km from storage facilities in the Chinese border city of Dandong to an oil depot in Sinuiju in North Korea. It supplies approximately 520,000 tons (3.64 million barrels) of heavy crude oil each year, according to its operator, China National Petroleum Corporation (CNPC). Once across the border, the crude oil is processed at North Korea's sole working refinery, the Ponghwa Chemical Factory, a facility built with Chinese assistance during the 1970s. The refinery turns the oil into refined products for North Korea's government, military, transport, agricultural and fishing sectors.

Staff comments

1. In 2012, a North Korean source disclosed that every year ‘the Ministry of Commerce of China and the North Korean government will discuss the catalogue of aid products, quantity, period, etc., but it is basically 100,000 tons of grain, 500,000 tons of oil, and materials needed by North Korea worth 20 million US dollars.’ This annual oil donation arrangement between the Chinese Government and the North Korean Government dates back to the 1970s. On October 17, 1970, the Chinese Government and the Government of North Korea signed an Agreement on Mutual Supply of Critical Materials 1971-1976. Under the terms of this agreement, the Chinese Government agreed to provide the North Korean Government with 500,000 tons of crude oil per year.