China crude flows to North Korea dried up in Sept.

BEIJING, Oct 30: China exported no crude oil to isolated North Korea in September, according to Chinese figures issued today, amid tension between the two communist neighbours over Pyongyang's nuclear weapons programme.

The oil trade numbers issued by the Chinese customs administration showed China's crude exports to all countries were down 76.4 percent by volume on the same month last year, as China tended to its own booming demand.

But with no crude shipments at all to North Korea -- almost entirely dependent on China for oil -- Beijing appeared to be showing no favours to Pyongyang, which snubbed it in July by test-firing missiles despite a public plea for restraint from Chinese leaders.

North Korea relies on China for up to 90 percent of its oil and perhaps a third of its food, according to experts' estimates. Many of them believe Beijing may use its chokehold on North Korea's oil needs to pressure Pyongyang back to nuclear disarmament talks it has boycotted since last November.

''For humanitarian reasons, China doesn't want to cut grain, because too many people would suffer. But oil may be reduced first to add pressure,'' said Piao Chengxian, an expert on North Korea at Yanbian University near China's border with the North.

All of China's 125,184 tonnes of crude exports for September went to the United States.

HIGH PRICES These latest available statistics did not cover October, when North Korea tested a nuclear device, prompting Beijing to harshly criticise Pyongyang and back a United Nations resolution imposing sanctions on some trade with the North.

In the first nine months of this year, China exported 369,643 tonnes of crude to North Korea, a 6.8 percent fall on the same time last year.

But the reported price of that crude rose 21.2 percent to 0 million, partly reflecting higher international oil prices throughout most of the year.

''The marketisation of their relationship is reflected in the prices,'' said Nathaniel Aden of the Lawrence Berkeley National Laboratory in California, who has studied energy trade between China and North Korea.

China charged North Korea an average 475.09 dollar per tonne of crude (65 per barrel dollar) this year, higher than the .76 dollar per tonne average (57 per barrel dollar) for all other customers, according to the customs data. But North Korea may not pay all the reported price, and may use barter or IOUs to cover part, say analysts.

China's crude exports to all countries were down 21.8 per cent for the first nine months.

The U N Security Council voted on October 14 to impose financial and arms sanctions on North Korea after it staged its first nuclear test earlier this month, but how those measures will be implemented remains a matter of debate.

The sanctions do not directly cover energy, but Washington has pressed China to use trade and oil ties to cajole North Korea away from more nuclear tests and back to disarmament talks.

Exports of diesel, key for fuelling trucks and much industrial machinery, also ground to a near halt. China shipped 262 tonnes to its neighbour in September, compared with an average near 3,000 tonnes per month for January through August.

In 2003, China's oil pipeline shut down for three days, adding to pressure on Pyongyang to draw back from nuclear brinkmanship.

Chinese officials said then it was a mechanical breakdown. Some Korean experts said it was deliberate.

North Korea has two oil refineries. One of them has been mothballed, and the other may have been hit recently by mechanical failures, said a Chinese oil trader who spoke on condition of anonymity.

Reuters