One of North Korea’s most enduring domestic challenges has been its inability to reliably meet domestic energy demands – both in terms of electricity generation and the provision of fuel for commercial, industrial, and military vehicles. North Korea imports oil products from its neighbors – primarily from China – in an attempt to supplement domestic power generation, while North Korean vehicles are primarily powered by these fuel imports. While North Korea has no proven reserves of petroleum or other liquids, some experts have suggested that both onshore and offshore hydrocarbon reserves exist in and around North Korea, though both political and technical challenges will likely complicate any efforts to explore and exploit these.
Energy Rich, Electricity Poor?
Electricity generation is an ongoing challenge for North Korea. Previous assessments have found that as many as 19 million North Koreans may live without electricity and that only 36 percent and 11 percent of urban and rural areas are electrified, respectively. Those North Koreans for whom electricity is available at times may only have access to power for as little as two hours each day.
While in the past North Korea was able to receive subsidized oil imports from the former Soviet Union, today North Korea generates most – as much as 76 percent – of its power from hydroelectric sources, with the remainder supplied by the DPRK’s large coal reserves and by imported petroleum products.
North Korea’s ability to import oil and petroleum products is limited by international sanctions, with United Nations Security Council Resolution 2397 capping imports of refined petroleum at 500,000 barrels per year and limiting imports of crude oil to four million barrels per year. Beyond power generation, North Korea relies on imports of oil and petroleum products in order to power vehicles. Restrictions on North Korean oil imports have likely impacted the North Korean military, including limiting the number of hours North Korean pilots are able to train and constraining North Korea’s ability to stockpile wartime reserves, but may also have contributed to such things as a lack of needed fuel for agricultural equipment. North Korean has shown itself to be capable of evading sanctions related to its import of oil, including through the use of illicit ship-to-ship transfers, and the DPRK has also taken steps to find alternatives to traditional liquid fuels.
Over the past 50 years, North Korea has engaged in exploratory surveys and test drillings, but has yet not yet clearly identified any commercially viable sources of crude oil or natural gas. Competing maritime claims with some of its neighbors may have contributed to the lack of North Korea discovery of exploitable oil or gas reserves, but likely more significant has been the DPRK’s inability to acquire the necessary drilling equipment and technology as well as the substantial financial and political risks that exist for foreign corporations hoping to engage in exploratory efforts with North Korea.
But Getting It Out of the Ground…
One expert has suggested that North Korea may indeed demonstrate good hydrocarbon potential. Mike Rego – formerly in charge of oil exploration for British firm Aminex, which in 2004 signed an exploratory agreement with North Korea before withdrawing from the country in 2012 – has argued that past explorations both on and offshore suggest relatively promising prospects for the discovery of energy reserves.
Rego also notes, however, that the constraints which have limited exploration and exploitation in the past will likely continue to do so.