DPRK Energy and EnergyRelated Trade with China

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DPRK Energy and Energy-Related Trade with
China Recent Trends and Implications
June 26-27, 2006 DPRK Energy Experts Study Group
Meeting Nathaniel Aden
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Todays Presentation

• Notable Findings
• Questions Concerning Energy Trade
• Data Sources
• Energy and Fuel Trade
• Energy-Intensive and Related Goods
• Trends and Implications

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Notable findings

• In 2005, energy and fuels accounted for 26 of
  official DPRK imports from the PRC, and 23 of
  exports by value.
• Whereas the DPRK is a net importer of PRC crude
  oil and oil products, it has been a net exporter
  of electricity and coal to China for the past two
  years.
• North Korean coal has been sold to China for a
  price per ton that is 55 lower than the average
  Chinese import price for coal likewise,
  electricity has been sold for an average 52 less
  per kWh than average PRC electricity imports.
• However, Chinese coal has been sold to the DPRK
  for 22 more than average Chinese coal export
  prices, and oil products have been sold to North
  Korea for 17 higher than average PRC export
  prices.
• The DPRK is increasingly a net importer of energy
  and energy-intensive products, and a net exporter
  of natural-resource and labor-intensive products.

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This presentation will address four questions on
DPRK energy trade with China

• What is the value and quantity of energy and
  fuels trade between North Korea and China?
• How does each country price energy and fuels
  exports relative to other trading partners?
• What is the energy- and labor-embodiment of
  DPRK-PRC trade?
• What do trade data indicate about the domestic
  energy situation?

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Direct DPRK data are elusive
North Korean trade data are covered in the UN
International Commodity Trade Database and on a
fairly detailed level in Chinese Customs
Statistics Yearbooks. In order to examine the
relationship between the DPRK and the PRC, this
presentation reviews data compiled by the China
Customs Bureau. Trade value data are in current
dollars according to current official exchange
rates.
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Energy and fuels has been a consistent portion of
DPRK-PRC trade
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In 2005, energy and fuels was the single largest
official DPRK-PRC trade category
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Crude imports were overshadowed by more than 2.8
million tons of coal exports
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But crude oil is more valuable
(imports)
(exports)
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and North Koreas sporadic oil imports have
continued unabated
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On the other hand, coal exports surged with
prices, while imports have diminished
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Sporadic exports of DPRK electricity have grown
more sustained.
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North Korean exports of electricity and coal have
grown at friendship prices
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But Chinese coal and oil product have been sold
at top dollar
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and the DPRK lost its controlled price of
127/ton PRC crude oil in February 1998
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Transportation equipment moves on a one-way
street between the PRC and the DPRK
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In trade with the PRC, DPRK exports became more
labor-intensive and imports more energy-intensive
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These mirror statistics have implications for
DPRK energy and bilateral relations

• DPRK-PRC trade deficit surged to its highest
  point in 2005 (588 million), while the value of
  the energy-trade deficit rose to its highest
  point after 1995 (173 million), offset perhaps
  by coal exports.
• Inelasticity of DPRK crude oil import demand to
  prices may indicate low discretionary usage.
• Expanding coal and electricity exports may
  reflect surplus capacity, or desperation for hard
  currency
• Asymmetrical energy export pricing suggests an
  unbalanced alliance
• Increasing energy-embodied imports may reflect
  undeveloped industry-integrated energy capacity
  (e.g., steel or aluminum production capacity)

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Thank you!

• For more information, please contact
• Nathaniel Aden
• ntaden_at_lbl.gov