The importance of KEDO fuel oil to the DPRK

Peter Hayes of the Nautilus Institute argues that the Heavy Fuel Oil supplied by KEDO is more of a political than an energy concern to the DPRK (KEDO Fuel Oil and the DPRK: A Special Report, 15 Nov 2002). KEDO's Heavy Fuel Oil is a small fraction of primary energy supply in the DPRK as well as of total fuel for electric power production. It is significant only in winter in thermal power production.

While the humanitarian cost may be substantial in the DPRK due to reduced lighting and heating of occupied buildings in the midst of the freezing winter, the impact is unlikely to be translated into significant leverage on DPRK decision-makers. Indeed, these impacts may increase the legitimacy of the DPRK leadership or lead to increased Chinese and Russian energy supply to the DPRK to make up the difference.

Why Heavy Fuel Oil?

The US undertook to supply HFO in return for freezing 200 MWe thermal equivalent of plutonium-producing DPRK reactors and other nuclear fuel cycle activities at Yongbyon. In the negotiations, the US first offered coal; DPRK said no thank you, we have coal, we want refined product. US said no thank you, you use refined product for military-industrial complex. Kang Sok Ju, the DPRK negotiator, remembered that they had 1 200 MWe power plant that used HFO from a Russian supplied oil refinery at Rajin Sonbong. The US accepted that it could supply liquid coal, that is, HFO, for use at this power plant and the DPRK agreed. Provision of HFO was never more than a sub-optimized, politically driven way for the DPRK and the United States to come to a working agreement. It had nothing to do with a rationally determined way to meet DPRK energy needs or energy development.

How important is HFO to the DPRK today?

HFO is a small, even tiny (2 percent in 2000) fraction of DPRK's current total primary energy supply that is mostly based on coal (two thirds) and biomass (about one third). HFO is basically liquid coal, so it adds to the coal side of the energy supply.

Thus, the DPRK has always viewed HFO as of marginal value, and a politically driven issue. For the DPRK, HFO delivery is a political litmus test of American intent with regard realizing their strategic goals from their nuclear fuel cycle strategy (including the latent weapons options implicit in that fuel cycle strategy) and not a fuel supply issue.

The HFO is approximately equal to the thermal value of the fuel that would have fired a thermal power plant of the same size as the foregone DPRK 200 MWe of home grown nuclear power reactors that were perfect for also making lots of plutonium. Thus, from a DPRK perspective, not only were they ambivalent about the HFO itself, but it represents no nett gain- they gave up in their own nuclear power plants what they got back. Few people in Washington comprehend this fundamental fact about HFO.

HFO in Power Production

If the lights were on and losing HFO meant that they went off, that's marginal leverage for the US when it cuts off HFO. But when the lights are already off for most people most of the time, having them off more than in the past won't make much difference to most people. In short, even the putative marginal leverage over DPRK's energy supply arising from an HFO cutoff is diminished by the realities of the DPRK power sector.

Moreover, the sulfur in the HFO has had a negative impact on their power generation capacity as it corrodes the boiler tubes and puts units out of action. For these and other reasons, the DPRK has had some trouble actually accepting HFO from KEDO over the years.

Coal is in very short supply in the DPRK all of the time, but most importantly in winter when it's needed for power generation and via distribution over pipes of power plant waste heat, for heating buildings. So the only time that HFO makes a marked difference to their hydrocarbon fuel supply is winter, that is, about now, especially in electric power.

The Impact of the HFO Cutoff on the DPRK

However, cutting off the HFO supply as winter arrives basically means that people who are sick, old, tired, will now be even colder, and will, at the margin, be slightly more likely to die from being sick or actually freezing to death in hospitals and homes. That's not likely to enhance US leverage over the DPRK
leadership much in a country where the leadership has survived a significant fraction of the population dying from cold and malnutrition.

Indeed, politically, it's likely to reduce US leverage by infuriating the DPRK leadership to the point where they simply cut off the dependency on HFO and reactivate either the 50 MW research reactor (run in a power line, or justify it as providing heat for buildings in the Yongbyon area, which it already does--and where some of the HFO went over the years); or ditto, the 200 MWe of frozen DPRK nuclear power reactors. It will also
provide a convenient and even (marginally) truthful rationalization of the population's dire circumstances to the DPRK propaganda machine--so domestic legitimacy of the Kim Jong Il leadership will increase.

In the short term, the HFO cutoff also slightly enhances Chinese influence over the Peninsula as they may make up the HFO difference in some way in DPRK primary energy supply. Russia may also take up some of the slack by reactivating the oil supply to the Rajin Sonbong oil refinery (the back end of which was the
HFO-burning power plant that the KEDO HFO was originally aimed for, but ended up being spread around over many power plants due to the unreliability of this specific HFO burning power plant).