SEEKING OIL IN NORTH KOREA.

He searched for oil in the badlands of Somalia and fuelled a stock market boom in Mongolia. He sued the world’s smallest republic, far out in the Pacific, for a chunk of what it is worth.

Now, he is betting on North Korea.

James Passin, a hedge fund manager at Firebird Management, believes the nuclear- armed country sits on as much as one billion barrels of crude — enough to make it as big a producer as Oklahoma. If the oil exists, he wants to help unlock it.

“You have a country with 25 million people — young, highly disciplined, literate — and a strong military-industrial complex,” he said in an interview.

“It’s possible that the early investors will be rewarded with potential for massive appreciation.”

The risks of sinking cash — even just US$ 7 million or so of Firebird’s US$ 700 million in assets — into a neoStalinist state with labour camps and virtually no private property are obvious. The geopolitical volatility was on full display last week, as North Korea claimed that it had tested a hydrogen bomb. And Passin is treading on murky investment territory, given the U.S. sanctions against the country.

His investors have experienced the wild rides that come with such frontier markets. Two of his funds are being liquidated after deep losses, including on banking in Iraq, gold in Armenia and oil and gas in Kenya.

But Passin isn’t deterred. “I see opportunities when other people are afraid,” he said.

Passin, 44, studied philosophy at St. John’s College in Maryland. He was inspired to enter finance, he said, in part by the story of Thales, a philosopher in ancient Greece who got rich by monopolizing olive presses before a bumper harvest he had foreseen in the stars.

Contrarian instincts have led Passin to out- of- the- way markets like Chechnya, Congo and Somalia.

His North Korean investments may be his most contentious.

Firebird owns nearly half of a Mongolian company, HBOil, which entered a joint venture with the government of Kim Jong Un in 2013.

The partnership gave the small company expansive rights to overhaul North Korea’s primitive energy sector by opening 100 gas stations, restarting a derelict refinery and drilling for oil and gas.

The projects have yet to materialize. Companies have been searching for oil and gas there since the 1980s, and it r emains unclear whether the country has any significant quantities.

Joseph Naemi, one of Passin’s longtime business partners, is advising HBOil, and believes there are deep reserves of oil — perhaps as much as a billion recoverable barrels on land. But the current low price of oil means that if it exists, and can be extracted, it still might not be profitable.

Passin’s investment also raises legal questions. Alexandra Lopez- Casero, a sanctions lawyer at the Bostonbased law firm Nixon Peabody, said the investment might violate U. S. sanctions against North Korea absent a licence from the Treasury Department in Washington. Other experts disagree, noting that the United States has not issued a blanket prohibition on investing in the North.

Passin said that Firebird had neither sought such a licence nor needed one. He added that an expert had reviewed the venture for him and concluded that it was legal.

Some analysts worry that any oil exploitation would fortify Kim and others in the country’s ruling elite.

“The security risk is not small, as the oil business in DPRK is exclusively handled by the Communist Party and the military,” said KeunWook Paik, an expert on North Korean oil at the research institution Chatham House, using the abbreviat i on f or t he Democratic People’s Republic of Korea, the country’s official name. “It will be a kind of Pandora box opening.”

Passin dismisses such concerns.

He said business with North Korea would both benefit ordinary people and encourage the totalitarian state apparatus to become “more open and less harsh.” Besides, he argued, if the West avoided commerce with unsavoury nations, much of the world would be off limits.

“I believe there are companies that will emerge out of the DPRK that will be of lasting importance,” he said.

“That will survive for centuries.”