While most of the sanction-bypassing oil trade with North Korea is thought to be originating from China, oil sales from Russia to Kim Jong-un's regime may be much larger than official figures suggest, as shell companies have been set up for illicit oil flows to Pyongyang, The Asan Institute for Policy Studies said in a recent report.
The report found that a substantial amount of North Korea's oil imports come from Russia, even though the majority is believed to come from China. According to the Asan Institute, there are indications that 622,878 tons of refined oil was transported to North Korea from Russia between 2015 and 2017, accounting for around one third of North Korea's total refined oil imports during the period.
Under the latest United Nations Security Council sanctions regarding oil sales to North Korea from December 2017, North Korea is allowed to import a maximum aggregate amount of 500,000 barrels of all refined oil products for 12 months beginning on January 1, 2018. The sanctions also introduced a limit of 4 million barrels-or 525,000 tons-per a twelve-month period as of 22 December 2017 for the supply, sale, or transfer of crude oil to North Korea.
According to the report by the South Korea-based institute, more recently, "oil tankers under a number of different national flags were spotted engaging in ship-to-ship transfer of oil, in a clear bid to avoid sanctions enforcement."
Russian tankers have been involved in several of these transfers, says the report.
The analysis found that in the three years between 2015 and 2017, shell companies and one North Korean state enterprise bought 622,878 tons of Russian oil worth US$238 million.
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"The entities involved tried to cover up the transactions by falsifying destination countries for the purchases, but the nature of shipping network used and the location where the deliveries took place show that the true destination was North Korea," the report says.
Recent reports that China had ramped up sales to North Korea have also raised concerns that Beijing could undermine the international sanctions against Kim's regime.
After the recent visits of Kim Jong-un to China, Beijing has almost doubled the volume of crude oil pipeline shipments to North Korea, South Korea's newspaper Chosun Ilbo reported last month, citing a source in Beijing.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More