Is peace in the (gas) pipeline for Pyongyang?

What's the similarity between a peace pipe and a gas pipeline?

Both are out of place in Pyongyang.

When a senior South Korean minister revived talks last month of a gas pipeline, running through North Korea, and carrying Russian natural gas to the south, it piqued the interest of gas players.

Such a move would put piped gas in direct competition with seaborne LNG, in the third-largest LNG importing country in the world for the first time.

The gas pipeline between the two Koreas and Russia could be reviewed if the security situation on the Korean Peninsula improved, state-affiliated Yonhap News reported in late March, citing South Korean Foreign Minister Kang Kyung-wha, who was speaking at a Seoul forum on regional energy cooperation.

The security situation she referred to was the planned summit between US President Donald Trump and North Korean leader Kim Jong-un. The talks would be the first time a serving US president has held a meeting with a North Korean leader.

But the trans-Korea gas pipeline project has been in the works for decades, long before Pyongyang's charm offensive at the recently held Winter Games, that set the stage for peace talks.

This 2011 roadmap to bring 10 billion cu m (7.5 million mt) of Russian piped gas to South Korea from 2017, was supposed to lead to commercial negotiations, and the signing of intergovernmental and host government agreements with Pyongyang, which would be paid a gas transportation fee.

But the project was derailed due to the aftermath of the financial crisis, deteriorating security situation on the Korean peninsula, western sanctions on Russia and Pyongyang, and South Korea's focus on LNG on the back of the world's biggest shipbuilding industry.

LET IT FLOW

Today, there are two major drivers for the pipeline project to go forward. Russia is keen to boost gas supply to Asian markets, and diversify from its European customer base.

So far, besides LNG, it only has pipelines to China, and a new customer could give it greater pricing leverage in Asia.

Under its long-term energy plan -- Russian Energy Strategy 2030 -- Moscow wishes to diversify as much as 25% of its natural gas markets to Asia, the biggest market for LNG.

The other driver is South Korean President Moon Jae-in himself, who has been pushing to normalize relations with Pyongyang even before he was elected.

The cornerstone of his presidency is an energy plan that phases out coal and nuclear power with gas and renewables.

His "New Northern Policy" and "Presidential Committee on Northern Economic Cooperation" are focused on joint projects including energy, shipbuilding, fishery and transportation, with its northern neighbors.

Russia is central to Seoul's "northbound" policy, and ASEAN to its "southbound" policy, both aimed at diversifying its economy from excessive reliance on China and the US.

So what is stopping the pipeline from going forward?

Basic energy security considerations for starters.

"It doesn't make strategic sense based on Seoul's threat perception," Singapore's S. Rajaratnam School of International Studies research fellow Collin Koh said.

Koh said the possibility of an inter-Korean deal for such a pipeline cannot be discounted, though it's likely to be met with fierce domestic resistance in Seoul, where many won't be too enthusiastic.

Kim is unlikely to interfere with any pipeline that has Russian interests as it will incur Putin's wrath.

But no one in their right mind would want to give him the keys to Seoul's energy supply that he could turn off at will.

The role of the US may be the biggest show stopper. An energy alliance in the Far East involving American allies, Russia and North Korea will not sit well with Washington or help US geopolitical strategy in any way.

After all, South Korea was one of the first countries to fall in line with American interests, when the US imposed sanctions on imports of Iranian crude.