Beijing has limited its oil products flow and banned condensate and LNG exports to North Korea, China's Ministry of Commerce and General Administration of Customs announced late Friday.
The measures are in line with the UN Security Council's sanctions resolution passed on September 11 that capped crude oil and refined petroleum product exports to North Korea.
MOFCOM and GAC did not specify the names of products that they will be banning and instead listed out the Harmonization System code, or HS code, of the products that are on the list.
The HS code is an international nomenclature for the classification of products. It allows participating countries to classify traded goods on a common basis for customs purposes.
The announcement included HS Code 2709000000, which stands for condensate and crude oil, but MOFCOM and GAC said in the announcement that crude oil was not in the banned list. China will ban condensate exports effective September 23, according to the announcement.
China will control oil product exports under HS code starting with 2710, 2712 and 2713, effective October 1.
Goods under HS code 2710 comprise key oil products including gasoline, diesel, jet fuel, naphtha and fuel oil, while 2712 and 2713 include petroleum max, petroleum jelly, petroleum residues, petroleum coke and bitumen.
Meanwhile, HS code 2711110000 stands for LNG. It was not immediately clear why China has added this product to the list given that there is no known regasification facility in North Korea.
NO DETAILS ON CRUDE
The UN resolution limits its members' exports of oil products to a total of 500,000 barrels (60,000 mt) from October 1 to December 31 and to 2 million barrels (240,000 mt) for all of 2018.
OFCOM and GAC said on the official website that Beijing would make an announcement to stop product exports from China once the volume of exports from all the UN members was close to the ceiling.
All product exports from China are required for the "livelihood" of the North Korean people and unrelated to the country's nuclear or ballistic missile programs or other activities barred by previous UN-backed resolutions, according to the announcement.
China would continue to ban all jet fuel exports to North Korea, it added.
The UN resolution also bars its members from exporting more crude to North Korea than they exported over the previous 12 months though the resolution allows approval for additional crude exports on a "case-by-case basis."
But MOFCOM and GAC did not mention any details about China's crude supply to North Korea in the past 12 months, nor did they say at what level they would cap exports.
NORTH KOREA'S SUPPLY SOURCES
North Korea produces no crude and has relied almost exclusively on shipments from Russia and China, mostly through aid deals. The then Soviet Union initially supplied North Korea with either free or cheap crude for years, and China has supplied crude to the country under a similar arrangement negotiated decades ago, William Brown, an adjunct professor who teaches courses on North Korea at Georgetown University's School of Foreign Service in the US told S&P Global Platts recently.
China sends small volumes of Daqing crude to North Korea's 1.5 million mt/year (30,000 b/d) Ponghwa refinery through a pipeline, two Beijing-based senior traders with different state-owned oil companies said.
The 30 km pipeline links China's border city of Dandong in Liaoning province with the Ponghwa refinery. The crude is carried from the Daqing block in Heilongjiang province by train to Dandong.
The Ponghwa refinery is configured to process only Daqing crude, according to Chinese traders.
China's last crude exports to North Korea were in December 2013 at 92,223 mt, according to customs data. Exports in the whole of 2013 totaled 578,002 mt (4.24 million barrels), the data showed.
After that, no crude exports to North Korea have been recorded. But market sources in North Asia said that North Korea currently buys about 6 million barrels/year of Chinese crude. - Platts -