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Chinese Oil Rig Sits In North Korean Waters For Months

Chinese rig in North Korean waters

An oil rig, property of the Chinese National Petroleum Corporation (CNPC), has been sitting in the North Korean exclusive economic zone in the Yellow Sea since this May, satellite images have revealed.

According to NK News, the presence of the rig in North Korean waters could be an indication that Beijing may be considering oil and gas exploration in its neighbor’s waters, as stipulated in a memorandum of understanding signed between the two countries 11 years ago.

The rig is in proximity to a patch that contains several exploration wells drilled in the 1980s and 1990s, some of which yielded oil. The patch is called the West Bay Basin, and according to a 2015 article, at least two of the wells showed promising results, yielding up to 450 barrels of oil equivalent per day.

It is possible that other exploration wells drilled in the area had returned positive results, but reliable information is difficult to find, NK News notes, citing a Chatham House associate, Keun Wook Paik, who said there were reports back in the late ‘90s that some wells there yielded as much as 3,500 boepd.

CNPC has declined to comment on the information about its 14,000-ton rig’s location, and it remains unclear at this point whether it is in fact drilling for oil. If it is, this could have important implications for the geopolitics of the region.

Related: Is the Era of Oil Megaprojects Over?

North Korea has no oil and gas industry and is heavily reliant on Chinese imports to keep going. China, which is not interested in the flow of refugees that would ensue should its neighbor collapse, is trying to maintain a workable balance between a possible nuclear threat from Pyongyang and the unfavorable consequences of an economic collapse there.

Early this month, reports emerged that the U.S. and China were holding private discussions to tighten the sanction hold over the North Korean dictatorship by limiting North Korea’s access to coal, oil, and iron ore—most of which it gets from China.

Last week, a senior U.S. official was quoted by Reuters as saying that China could be “motivated” to cut its coal exports to North Korea by deploying a U.S. missile system in South Korea. The presence of U.S. and South Korean troops on its doorstep is hardly a dream come true for Beijing, so it is possible that it is negotiating mutually beneficial options with Pyongyang as well.

By Irina Slav for Oilprice.com

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