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China, North Korea Strike Oil Exploration Deal


China says it has reached a deal with North Korea to look for oil in the Yellow Sea. Chinese officials gave few details of the pact reached recently between Beijing and Pyongyang.

The deal underscores China's need to find new sources of oil to fuel its booming economy, and also its desire to strengthen trade ties with North Korea, which Beijing is trying to woo back to multi-party negotiations on nuclear disarmament.

Talks had been under way between Chinese and North Korean officials for several months before Chinese Foreign Ministry spokesman Liu Jianchao confirmed on Tuesday that they have struck a preliminary agreement.

"Through equal and friendly consultations, our two countries have reached an agreement to jointly develop the border sea area," said Liu. "Therefore, on the natural resources issue, agreement has been reached."

Liu said a more detailed agreement would come at an unspecified date.

The deal covers an area of the Yellow Sea near North Korea. China has already been working to develop offshore fields in the area on the Chinese side of the sea.

Analysts say an agreement would benefit impoverished North Korea, which they say does not have the resources or technology to carry out major oil exploration projects.

China has supplied a significant amount of fuel and food to its longtime ally, since North Korea's economy began to decline in the early 1990's. Beijing appears eager to prevent a total collapse in the North, which could result in a destabilizing flow of refugees into China.

Beijing has joined the United States, Japan, South Korea and Russia in trying to persuade Pyongyang to give up its nuclear weapons programs. Three years of talks, however, have made little progress.

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