UN resolutions and a global pandemic were not sufficient to halt North Korea’s acquisition of new oil tankers last year, with Pyongyang adding two new members to its oil smuggling fleet. The new acquisitions follow on from another tanker transfer in 2019, demonstrating North Korea’s ability to draw upon several avenues to continue expanding its oil smuggling capacity despite UN prohibitions specifically targeting the practice passed in 2017.
Two of these three new vessels were previously owned by South Korean companies, while the last came from the DPRK’s established sanctions evasion networks in a transfer that showcases the multi-faceted roles played by Pyongyang’s trusted third party evaders working in foreign countries.
Two of the three vessels have also already been highlighted by the UN Panel of Experts (PoE) for their roles in conducting ship-to-ship (STS) transfers of petroleum products, indicating that Pyongyang is quick to put newly acquired tankers to work in its illicit oil import business.
Prohibited and Evaded
Whether working to smuggle coal, oil, luxury goods, or military equipment, North Korea’s maritime fleets have been a key component of Pyongyang’s sanctions evasion methods for years. In 2017, the UN Security Council took aim at this evasion vector by prohibiting member states from the “direct or indirect supply, sale or transfer” to North Korea of “any new or used vessels” unless previously approved by the UN Security Council.
The prohibition aims to hinder the North’s illicit programs by interfering with the country’s ability to replace its aging fleet, one of the oldest and least safe commercial fleets in the world, in addition to preventing the expansion of illicit trade volumes via maritime routes. Yet the recent additions to North Korea’s oil smuggling fleet highlight how Pyongyang been able to defeat these measures in order to then circumvent the United Nations’ restrictions on oil, essentially layering one set of sanctions breaches on another.
The United Nations’ own International Maritime Organization (IMO) lists the registration of a new oil tanker called the Sin Phyong 5 as recently as October of last year. The vessel is now owned by the Pyongyang-based Korea Myongryu Trading. Although not much is known about these types of DPRK-domiciled companies, Myongryu Trading also owns the Myong Ru 1, a vessel whose oil smuggling activities have been noted by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) and the UN Panel of Experts, so it does not seem difficult to predict what the Sin Phyong 5’s role will be going forward.
According to data from the Pole Star Global maritime tracking platform, the Sin Phyong 5’s last transmission was on July 27, 2019. At the time the vessel was called the Woojeong, and it sailed from South Korea to China’s Wangja Bay on the country’s north-eastern coast.
Image courtesy of Pole Star Space Applications
That the oil tanker has not broadcast its location since its new owners acquired it is not surprising, as most of the DPRK’s tankers only sporadically broadcast their locations, if at all, despite the illegality and safety risks that this practice entails. The technique is so common among the DPRK’s tankers that a lack of positional transmissions may even indicate a confirmation that the vessel has been acquired by Pyongyang.
More surprising is that the Sin Phyong 5’s most recent owner prior to being acquired by North Korea was a South Korean company based in the port city of Busan called Young Sung Global. It is one of two tankers that recently made their way from South Korea to its northern neighbour, with the second being the Kwang Chon 2 which officially joined the DPRK’s tanker fleet in November 2019. The Kwang Chon 2 was observed delivering oil to North Korea’s Nampho port on 10 different occasions before this date.
Interviews with the parties involved revealed that both, tankers made their way to the DPRK via South Korean brokers to individuals or companies in China, though the brokers were reticent to give further information on the tanker sales citing confidentiality reasons.
It is worth noting that the UN resolutions prohibit both the “direct and indirect” transfer of sanctioned materials and assets, so such explanations may not be enough to satisfy a strict interpretation of the United Nations’ wording. Whether or not the South Korean brokers breached resolutions may rest on what due diligence they conducted into the China-based buyers, who clearly also broke UN resolutions themselves.
The Wol Bong San (IMO 7636638) also joined North Korea’s rank and file in 2020. Previously known as the Xin Hai and sailing under a Sierra Leone flag, the PoE noted in their most recent report that it delivered oil to Nampho on September 1, 2020, adding that investigations into the ship “continue”.
Unlike the Sin Phyong 5 and Kwang Chon 2, the Wol Bong San was not transferred from a South Korean company but from the infamous Baili Shipping and Trading, a Hong-Kong based node in the network of companies and individuals involved in the Jie Shun case, which saw the seizure of North Korean rocket propelled grenades by Egyptian authorities in 2016.
Although the PoE highlighted the Wol Bong San’s direct delivery to Nampho, the tanker’s movements while under Baili’s auspices also appear unusual, showing multiple trips to a favored North Korean STS zone east of the Zhoushan port area from Taiwan between 2017 and 2020.
Image courtesy of Pole Star Space Applications
Baili’s involvement with the Wol Bong San points to the company’s capabilities within North Korea’s sanctions evasion sphere. The company and its owners have been tied to weapon smuggling, coal shipments, and oil transfers, and now Baili can seemingly also add vessel transfer to the list of sanctions it has violated. Despite this, the company, its offshoots, and its operators have never been sanctioned by either the United Nations or OFAC.
Between them, the transfers indicate two avenues for North Korea to acquire new vessels in breach of UN resolutions. Pyongyang sourced new vessels from seemingly legitimate routes aided by potentially less than diligent local brokers, or from well-established sanctions evaders who remain clear of designations and their associated red flags.
In all three recent transfers the common denominator was agents acting in China, which likely does not bode well for any improved enforcement of this particular UN restriction. Beijing’s interest in DPRK resolutions is normally correlated with the state of relations with Washington, and the fallout of the pandemic combined with a new U.S. administration may keep eyes away from the nitty gritty of Pyongyang’s ever expanding sanctions evasion toolset. If North Korea was able to acquire new oil vessels without much trouble in 2019, and from its southern neighbor in 2020, it will likely find it even easier in 2021.