Technically, the United States and North Korea are currently at ‘war’, although this is a somewhat flimsy interpretation of North Korea cutting all diplomatic ties with the US back in 2016.
The recent talks in Hanoi had the potential to end this cold conflict and put a feather in Donald Trump’s cap as the man to finally solve the North Korean denuclearisation issue once and for all.
Unfortunately, talks between Trump and Kim Jong-Un broke down, with the president unwilling to lift all sanctions on the ostracized nation which immediately resumed its classically aggressive military developments.
Amongst all this, there are several major industries with an eye on the conflict. With regard to the energy industry, there are a few areas worthy of note.
Cyber Protection Concerns
With continued punitive sanctions slowly strangling the North Korean economy, cybersecurity giant McAfee recently reported that North Korean hackers have been targeting the critical infrastructure of the United States, including businesses in the energy sector.
McAfee assessed that such attacks were ongoing through talks in Hanoi, with the US Government suggesting North Korea has stepped up its cyberattacks on financial institutions in order to generate more funds.
With the North’s cyberattacks extending around the globe, major energy companies in the US, United Kingdom and Germany will need to scrutinize their cybersecurity framework in the face of danger from a country that has fast become one of the world’s major cyber threats.
South Korean Strengthening Ties
On a positive note for US energy suppliers, South Korea has invested heavily into US oil and gas, continuing record trade volumes and further strengthening its ties with Washington.
With a break down in negotiations, American energy giants can expect further financial commitment, with South Korea quadrupling its oil purchases from this time last year as the market booms in light of increasing oil and gas production.
As the world’s fifth-largest crude oil and third-largest natural gas importer, South Korea represents a huge market for US suppliers who will look to further dent the majority import share of the Middle East.
The North Korean Potential
During the Soviet Union era, North Korea was the industrial centre of the Korean peninsula. However, following the dissolution of the Soviet Union in the early 90’s, the North lost it’s major trading partner and has since faded heavily under the weight of UN and US sanctions.
Should global relations recover, however, North Korea offers significant energy potential on three major fronts:
North Korea Can Become Another Energy-Hungry Power
North Korea’s estimated GDP in 2015 was $40 billion. South Korea’s was, in stark comparison, $1.91 trillion (approximately 50 times larger).
As a country that appears virtually pitch black at night on satellite images, it’s clear that North Korea is an economically and energy starved nation which, if permitted, could become a significant global consumer.
To offer some scale: Kim Jong-Un would have to increase the country’s oil consumption by ten times just to match the energy levels of Vietnam.
In a more peaceful state, North Korea represents huge economic potential for energy suppliers.
Untapped Natural Resources
Although somewhat of an unknown, North Korea has oil and gas potential across a number of sites that could provide significant export revenue on top of boosting its own energy provisions.
Known to have significant coal resources, the North is also believed to have huge rare-earth mineral deposits stored, which are used in electric motor and wind turbine development.
A Key Transport Route
North Korea offers a key geographical location, linking Russia, China and South Korea. Of course, no transit routes through the territory currently exist.
For Russia in particular, improved relations could provide huge advantages as they look to develop major new gas pipelines through to China and develop its far eastern region. South Korea could also benefit from a pipeline, which would open it up to increasing investment in gas resources.
Just one of many interest facets to the ongoing tensions, the energy industry stands to gain from improved global relations with North Korea. Following recent events, such changes are but a distant pipedream. However, North Korea’s potential in the energy market is undeniable.