Gas pipeline via North Korea, project risks

Possible construction of a gas pipeline from Russia to South Korea via North Korea has been actively discussed lately. There are indeed some arguments in favor of this project. South Korea has a developed industry and quite high living standards; it will inevitably increase exports of hydrocarbons. Russia may well become a source of such supplies considering growth in political instability in the Middle East creating risks to permanence of supplies from this region. Quite probable decline in nuclear energy production in the whole world and in Southeastern Asia in particular following the Fukushima catastrophe will also play into the hands of producers of hydrocarbons, including Russia. A political component should be also taken into account – if the trans-Korean gas pipeline is fully and constantly loaded, the sides engaged in this project may theoretically increase the level of trust in each other. Finally, there will be an additional possibility to employ construction capacities of Russian contractors.

But in reality such plans are unlikely to be put into practice. The current political regime in North Korea is very unpredictable both for Moscow and Seoul. Pyongyang will surely try to blackmail them by cutting off transit in every case of sharpening of a political situation, which is not a rare thing on the Korean peninsula where risks of full-scale war between the North and the South still exist. Thus, the more probable scenario is building a facility producing LNG or CNG in Vladivostok or in Sakhalin to ship fuel to South Korea by tankers.

By Stanislav Mitrakhovich, NESF leading expert