A top Chinese state-owned oil and gas company has reportedly suspended fuel sales to North Korea, according to inside sources.
China National Petroleum Corp has decided to put fuel sales on hold because doing business with Pyongyang is “no longer worth the risks,” sources with direct knowledge of the situation told Reuters. Regular compliance checks to determine whether a company or firm is in violation of sanctions are increasing the pressure, especially in China, which accounts for almost 90 percent of all North Korean trade. Furthermore, North Korea is often an unreliable business partner, as firms frequently fail to pay for goods and services.
Reuters speculated that Chinese companies may be facing credit crises as Chinese and international banks address sanctions compliance issues but was not able to confirm.
Neither Beijing nor CNPC have acknowledged the sales suspension, with a Ministry of Foreign Affairs spokesman commenting that he was no aware of the situation when reporters questioned him.
CNPC is one of China’s leading energy companies, and it provided the vast majority of the fuel sold to North Korea last year. China sent 96,000 tons of gasoline and 45,000 tons of diesel collectively worth $64 million to North Korea in 2016 for civilian and military purposes.
Data for fuel shipments to North Korea, as well as rising fuel prices in the North, suggest that China may be cutting the supply.
China suspended coal shipments to North Korea in February and reportedly played an active role in convincing North Korea not to conduct another nuclear test, but there is more that can be done.
“China is still falling far short of what it could bring to bear on North Korea in terms of pressure,” a senior White House official explained to reporters Wednesday, “Coal is only one component of that. We very much want to see China do more than it’s willing to do, while we do recognize that China is doing more than it has done in the past.”
“There has to be more pressure on the North Korean regime,” White House National Security Adviser H.R. McMaster said Wednesday, “China has a great deal of control over the situation.”
Beijing argues that its power to influence Pyongyang is limited and that it is doing the best it can, asserting that it is neither the cause nor the crux of the current crisis on the Korean Peninsula, despite clear evidence that the regime has been empowered by China for decades.
China has cut fuel sales to North Korea in the past, sending a message to Pyongyang, but even when China steps up the pressure, the North will often turn to other sources.
Ri Jong Ho, a former North Korean official who served in Office 39, which secured supplies and hard currency for the regime through illegal activities and exchanges, before he defected, revealed recently that North Korea secures up to 300,000 tons of oil products from Russia through dealers operating out of Singapore and has been doing so since the 1990s.
“It is a wrong perception that North Korea is completely dependent on China,” Ri told Kyodo News, explaining that North Korea has been trying to reduce its dependence on China since Kim Jong Un issued an order to expand trade with Russia and Southeast Asia in 2014. Ri did, however, acknowledge that North Korea still obtains around 500,000 tons of crude oil each year from China, giving Beijing a certain degree of leverage.
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