Nuclear Nonproliferation:

Heavy Fuel Oil Delivered to North Korea Under the Agreed Framework

T-RCED-00-20: Published: Oct 27, 1999. Publicly Released: Oct 27, 1999.

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James E. Wells, Jr
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Office of Public Affairs
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Pursuant to a congressional request, GAO discussed the status of heavy fuel oil delivered to North Korea under the October 1994 U.S./North Korean Agreement Framework, focusing on the: (1) status of heavy fuel oil funding and deliveries to North Korea; and (2) controls in place to detect the diversion of heavy fuel oil from heating and electricity generation to other purposes not specified in the Agreed Framework and any limitations in these controls that would allow North Korea to divert heavy fuel for unintended uses.

GAO noted that: (1) as of July 31, 1999, 1.9 million metric tons of heavy fuel oil had been delivered to North Korea at an approximate cost of $222 million; (2) for the first 3 years of the Agreed Framework's implementation, shipments to North Korea were not regular and predictable because the Korean Peninsula Energy Development Organization (KEDO)--the organization that has arranged and paid for the majority of the heavy fuel oil shipments--did not always have sufficient funding to pay for heavy fuel oil deliveries; (3) for the past 2 years, shipments of heavy fuel oil to North Korea have been made more regularly because of increased contributions from the organization's members and decreasing commodity and freight prices; (4) however, a recent rise in oil and freight prices caused the organization to seek additional funding from the United States in order to pay for this year's remaining scheduled heavy fuel oil deliveries; (5) the Department of State and KEDO, with the cooperation of North Korea, have implemented a monitoring system at the seven North Korean heating and electricity-generating plants that are authorized to use KEDO-supplied heavy fuel oil; (6) the purpose of this system is to ensure that North Korea uses the heavy fuel oil only for heating and electricity generation at the facilities; (7) KEDO's portion of the monitoring system consists of meters that measure the flow of fuel to oil-fired boilers at the plants, recorders that compile daily and cumulative information on flow rates, and periodic monitoring visits to each plant; (8) power outages and the poor quality of the electrical power available to the plants have affected the operation of the monitoring equipment; (9) KEDO's monitoring system by itself is not designed to provide complete assurance that the heavy fuel oil delivered to North Korea is being used as prescribed by the Agreed Framework; (10) however, the U.S. government supplements KEDO's monitoring system with national technical means to provide additional confidence that the heavy fuel oil is being used for heating and electricity generation; (11) State officials have acknowledged that there is some evidence that North Korea has used perhaps 5 percent (or 75,000 metric tons) of the heavy fuel oil for unauthorized purposes; and (12) according to State, no clear evidence has emerged of any significant diversion of the deliveries of heavy fuel oil to North Korea to unauthorized purposes.

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