Chinese Government donates 525,000 tons of crude oil in 2018

In 2018, the Chinese Government donated approximately 525,000 tons of crude oil to the North Korean Government. 525,000 tons of oil is equivalent to 3,832,500 barrels of oil. Therefore, to estimate the monetary value of this donation ($249,993,975), AidData has taken the average price ($65.23) of a barrel of West Texas Intermediate (NYMEX) crude oil in 2018 and multiplied it by 3,832,500 barrels of oil. This crude oil donation project was supported via recurring grants from China’s Ministry of Commerce (MOFCOM) between 2000 and 2018. 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. China’s provision of oil to North Korea — through the Dandong-Sinuiju Pipeline (or ‘Friendship Oil Pipeline’) — was exempted from the sanctions that the United Nations Security Council imposed on North Korea in December 2017. In Paragraph 4 of resolution 2397 (2017), the United Nations Security Council decided that all Member States should prohibit the direct or indirect supply, sale or transfer of crude oil to the Democratic People’s Republic of Korea (North Korea) exceeding 4 million barrels or 525,000 tons, unless it approved in advance on a case-by-case basis for a 12-month period after the date of adoption of the resolution (December 22, 2017). Pursuant to the reporting clause contained therein, the Chinese Government reported that the amount of the supply of crude oil by China to the Democratic People’s Republic of Korea was 150,500 tons from December 2017 to February 2018; 147,900 tons from March to May 2018; 108,500 tons from June to August 2018; and 118,100 tons from September to November 2018. These deliveries sum to precisely 525,000 tons of crude oil.

Additional details

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. 2. One metric ton of crude oil is equivalent to roughly 7.3 barrels of crude oil. 3. AidData assumes that all of the 2018 crude oil deliveries that the Chinese Government voluntarily disclosed to the United National Security Council were donated rather than sold (per the longstanding oil donation arrangement between the Chinese Government and the North Korean Government). 4. In August 2021, analysis of satellite imagery provided evidence of Chinese and North Korean efforts to repair and/or expand the 47-year-old Dandong-Sinuiju Pipeline (‘Friendship Oil Pipeline’) near the border between the countries. At that time, it was unclear if the effort was indicative of difficulty transporting crude oil from China to North Korea through the pipeline and a shift towards the supply of refined petroleum products via offshore (ship-to-ship) transfers. However, multiple United Nations Security Council reports provide evidence of an increase in illicit ship-to-ship transfers of refined petroleum products circa 2019/2020. This issue warrants further investigation.

Number of official sources

2

Number of total sources

7