- The current regime has done little to exploit North Korea’s potential hydrocarbon reserves
- While hereditary succession suggests little will change, a major oil find would unlock massive growth potential
- The country’s reserves have been estimated at “tens of billions of barrels” of oil
As we approach Juche 100, or the year 2011 in the Gregorian calendar, the situation in North Korea has almost hit rock bottom. Juche 100 will mark the centenary of the birth of the country’s “Eternal Leader”, Kim Il-sung, but it hardly seems time for a celebration.
Last week, the Juche (self-reliant) state took a major step toward announcing Kim Jong-il, the current “Dear” leader’s, replacement, which looks set to be none other than Kim’s youngest son, Kim Jong-un, the “Brilliant Comrade”. It should be noted at this juncture that shrouds of uncertainty surround the younger Kim, as little is known of him, other than that he was schooled in Switzerland, he likes basketball, and aged around 28, he is a complete military and political novice.
The succession will come, when it does, as no real surprise to those who follow on-goings in North Korea, as Kim senior has long been expected to pass power down to one of his sons, the same way his father did.
Kim Jong-il’s government reshuffle on June 7 consolidated his grip on power by appointing his brother-in-law, Jang Song-taek, who is believed to favour a hereditary succession, vice-chairman of the National Defence Commission, the North Korean government’s most powerful arm.
The appointment of the almost-mythical Kim Jong-un would further entrench the Kim-run kleptocracy, making relations with the West and the South appear evermore unlikely.
With such machinations going on internally, it seems rather a better time to explore the possibility and indeed the implications of broader changes.
Difficulties
Kim the Younger was promoted from complete zero to assumed hero, gaining the rank of Four Star General. This marks what many see as his father’s decision to name him as his successor despite previous speculation that it would be his eldest son, Kim Jong-nam, who then fell out of favour.
During the Worker’s Party of Korea (WPK) conference, the first since 1980, when Kim Jong-il was announced the heir apparent, his sister, Kim Kyong-hui, was also promoted to the rank of General as well as being made a member of the state Politburo.
The truth is difficult to unearth in North Korea. In the eyes of the World, it appears that disinformation, propaganda and the lack of a single reliable news source transformed North Korea from a feared and potentially lethal foe into an unmitigated farce.
It certainly has played its part. For example: The story of Kang Tong Rim, a South Korean pig farmer who was wanted for assault in his homeland. He defected to the North through the Demilitarised Zone (DMZ) on October 27, 2009. Kang seems to be an anomaly, the only apparent instance of a South-to-North defection.
Unsurprisingly, the North welcomed Kang with open arms, making him somewhat of a poster boy. An official release by KCNA said that Kang, had previously “made several attempts for defection with his longing for the northern half of Korea, but in vain.” It added that he was “pleased with the accomplishment of his desire for defection” and was receiving the “warm care of authorities.”
Such stories can make it difficult to believe the country’s claims of a wealth of natural resources.
North Korea’s influence on the energy industry is currently minimal, and what wealth it does hold looks very unlikely to be fully utilised under the current regime.
In 2009, the US Central Intelligence Agency (CIA) estimated that North Korea produced just 93 barrels of oil per day, while consuming around 16,000 bpd. Put in a global context, this is remarkably little for a country with more than 22 million inhabitants – in comparison, Syria, which also has a population of around 22 million, uses 252,000 bpd.
Pyongyang lives in fear of energy crises, in light of a lack of oil and gas, which led firstly to the collapse of the country’s agricultural industry and then resulted in famine during the 1990s. This gives the international community a position of leverage over North Korea.
Estimates from Pyongyang put the country’s oil reserves at “tens of billions of barrels” – significantly higher than Indonesia’s 5 billion-barrel reserves – however, this comes as no real surprise given that the DPRK’s “Eternal Leader” is now deceased and considering the country’s history of propaganda, disinformation and myths.Tensions
On October 6, the Associated Press reported that North Korea agreed a deal in 2007 to “disable its main nuclear complex in Yongbyon north of Pyongyang in return for 1 million tonnes of fuel oil [7.33 million barrels] and other concessions and in June 2008, blew up the cooling tower. But the disablement came to halt as the North wrangled with Washington over how to verify its past atomic activities.”
AP also reported however, that Pak Kil Yon, North Korea’s Vice Foreign Minister “vowed at the United Nations last week that the North would strengthen its nuclear capability in response to what he described as hostile moves by the [US].” The report went on to add that DPRK is believed to have enough weapons-grade plutonium for at least a 6 warheads.
On March 26, 2010, the Cheonan, a South Korean corvette was sunk in waters just south of the border, killing 46 South Korean sailors. Reports were carried out, which laid the blame firmly with the North, suggested a torpedo to be the culprit. In fact, shrapnel was found which was identical to a North Korean torpedo previously captured by South Korea. Pyongyang issued a statement urging the “puppet military warmongers” to put an end to their investigation, warning of “serious repercussions.”
The central news agency (KCNA) referred to the incident as a “regretful accident”, later going on to say that it was the US that was “behind the case of Cheonan.” However, with such damning evidence, it is hard to see much grounding for the claims of the North.
Why not intervene?
Intervention is not really in anyone’s best interests. While North Korea may pose somewhat of a military threat in theory (and practice in the instance of the Cheonan), the reality of it taking major action seems fairly unlikely. Nor does it seem likely that North Korea would be attacked.
The country has a well-documented military arsenal, with reports of around 1.1 million soldiers and a reserve force comprising 8.2 million personnel, it has the fourth-largest standing army in the world.
This deterrent is not however, the only reason invasion is unlikely. War would bring (even further) economic turmoil to North Korea, with potentially disastrous consequences for the region.
China and US-allied South Korea would be the first ports of call for the millions of refugees who would likely flee the North, creating major humanitarian crises in both countries.
To this end, South Korea’s President, Lee Myung-bak has proposed a contingency plan under the form of the Unification Tax, which proposes would help to underwrite the fallout from the eventual demise of North Korea’s ruling family. Meanwhile, on October 6, South Korea’s Chosun Ilbo daily speculated that Chinese patience would remain pertinent, saying: “If China were to shuts off supplies of oil, food and other necessities, the regime would soon collapse.”
The newspaper also pointed to “strategic interests” rather than “the much-vaunted ‘blood ties’ formed in the Korean War” as the reason for China continuing to turn a blind eye to North Korean petulance.
Both China and the West may see North Korea as a necessary evil. While unstable, the Juche regime does provide a buffer between extensive South Korean capitalism and partially diluted Chinese communism.
Stability in Pyongyang, in whatever form could be the key for North Korea to unlock its oil and gas potential.
Successsion
It appears more likely therefore, that China, in its capacity as North Korea’s closest (and almost only) ally, will push for more the same from Pyongyang, however, with greatly increased stability, rather than a major upheaval, which could tip the balance.
The question is: can Kim Jong-un provide a more stable government when his father’s wavering health leads to his demise?
Unlike Kim Jong-il, Jong-un’s time spent learning the ropes under paternal guidance – the former spent nearly 14 years (1980-1994) under the tutelage of Kim Il-sung, before assuming control – looks likely to be brief.
The promotion of Kim Kyong-hui and Jang Song-taek, the younger Kim’s aunt and uncle, to such lofty positions indicates that the Dear Leader does not expect to be in power for long, and may be entrenching his hereditary hold over the country to ensure supervision of his son’s rise to the throne.
An energy future?
With such uncertainty over the future of the hermit state and little indication of imminent stability, few would be gutsy enough to try risk exploring for these suggested reserves.
In June however, London-based Aminex announced that it was “about a year” away from beginning field work on its 50,000 square-km exploration licence in the East Sea Basin, adding that it expected to find “substantial reserves.”
Were extensive reserves to be found, it would be a major shot in the arm for North Korea and it’s disastrously weak economy. Not only would this present an opportunity for the country to gain some energy independence, but it could immediately give it some clout in international dealings.
As has been seen in Myanmar, which has become a supply state for China, massive hydrocarbon reserves can transform even the most politically unattractive countries.
BP’s Statistical Review of World Energy 2010 reported that Myanmar had reserves of around 570 billion cubic metres of natural gas at the end of 2009. A prize of this size has been impossible for China to turn its nose up at, investing billions of US dollars in developing the Shwe gas field among others, as well as a major pipeline network from the port of Kyaukphyu in the Bay of Bengal, across the country and north east to Kunming in China’s Yunnan Province.
Making use of such handy resources is seen by China as an excellent way to solve the issue of transportation via the Malacca Straits between Sumatra, Singapore and Malaysia, which is well known for its piracy attacks.
Baby steps
We may in reality be no closer to North Korea emerging from its shell, however, Kim Jong-un’s unprecedented climbing through the hierarchy as well as further-reaching political machinations, show that North Korea is gearing up for a change.
As with everything in North Korea, only time will tell what will come about from these moves, however, the situation is currently very finely poised on the proverbial knife-edge, and any change will likely have major reverberations that the long-suffering Koreans are sure to feel.
The country has been all but closed to the outside world since its Kim Il-sung-led inception in 1948 and it remains to be seen whether the shift in power can open the country up to a new world of foreign influence and trade.
