North Korea relies on two domestic sources of commercial energy - coal and hydropower - for most of its energy needs. In 2001, coal accounted for about 86% of the country's primary energy consumption.

North Korea lacks domestic petroleum reserves, but the West Korea Bay may contain hydrocarbon reserves, as it is considered to be a geological extension of China's Bohai Bay. Offshore exploration concessions previously held by Sweden's Taurus Petroleum, Britain's Soco, and Australia's Beach Petroleum have been allowed to lapse, having failed to find oil in commercial quantities. Petronas of Malaysia has taken over Block A, previously held by Soco.

In November 2001, the North Korean government awarded its first concession for an onshore block to Sovereign Ventures of Singapore, which covers an area in the Tachon-Rajin area near the Chinese border. In September 2002, the company reported that initial seismic survey results had indicated probable oil and natural gas deposits of modest size.

Norway's Global GeoServices reported in October 2003 that it had signed an agreement for offshore surveys.