A pipeline from Russia across North Korea to South Korea is still a long way off. Photo: iStock
The direction of Russian gas pipelines is shifting from west to east. Photo: iStock

North Korea could earn US$195 million annually in trans-shipment fees for Russian natural gas piped through its territory to South Korea, it has been revealed.

State-run Korea Gas Corp (KOGAS) calculated the transit fees at the request of a member of the conservative Liberty Korea Party, Yonhap News reported, estimating them at between 180 billion won ($159 million) and 221 billion won ($195 million).

The idea of a piped natural gas (PNG) link from the Russian Far East to South Korea via North Korea has been on the table since early North-South rapprochement efforts in the late 1990s, but amid geopolitical tensions, the concept never got off the ground. PNG is more economical than LNG (liquified natural gas), as the latter needs to be liquefied, then re-gasified, in costly terminals.

It has been resurrected with a vengeance this year, as the two Koreas proceed with and plan multiple cross-border projects. These include cultural and sports exchanges, de-mining certain areas of the De-militarized Zone, removing the sidearms of guards in the truce village of Panmunjom and conducting joint reforestation projects in the North.

KOGAS and Russia’s Gazprom have been undertaking joint studies on the gas pipeline after the summit between Russian President Vladimir Putin and South Korean President Moon Jae-in during this year’s World Cup.

The gas company estimated the fees for North Korea on the basis of paying $2 to pump 1,000 cubic meters of gas every 100 kilometers, a calculation based on Gazprom contracts with Ukraine, Belarus and Slovakia, Yonhap reported.

While the fees would be a significant financial boost for the cash-strapped regime of Kim Jong Un, the much-discussed project would require the lifting of multinational sanctions on North Korea before it could proceed, KOGAS noted.