Deal in sight at North Korea nuclear talks
By Jack Kim and Chris Buckley BEIJING (Reuters) - Envoys from six countries stood on the verge of a deal to start unwinding North Korea's nuclear arms programme after agreeing a multi-million-dollar package of energy aid for the reclusive communist state. Under an agreement drawn up after days of haggling in Beijing, North Korea would receive 1 million tonnes of fuel oil in return for disabling its nuclear facilities, media reports said on Tuesday.
Citing a source at the negotiations, Japan's Kyodo news agency said Pyongyang would also be offered 50,000 tonnes of fuel oil for closing the nuclear facilities and allowing inspections by the International Atomic Energy Agency. 
"North Korea basically agreed to all the measures in the draft," chief U.S. negotiator Christopher Hill told reporters before going back into the talks with counterparts from the two Koreas, China, Japan and Russia.
He voiced confidence that the six countries' delegates would get a green light from their capitals, but Japanese Foreign Minister Taro Aso sounded a note of caution in Tokyo.
"This is a first step," he told reporters after speaking to U.S. Secretary of State Condoleezza Rice by telephone. "Whether it actually goes ahead remains to be seen. We do not know whether it will go ahead just because it has been signed."
A gulf of distrust divides the isolated North from others in the talks, especially the United States, and diplomats have stressed that even this initial disarmament action could founder.
The talks in Beijing focused on how to begin implementing a September 2005 agreement that promised North Korea aid and security assurances in return for nuclear disarmament.
"THE WRONG SIGNAL"
However, the proposed plan will be only the first step in locating and dismantling the nuclear arms activities of North Korea, which detonated a nuclear device for the first time last October. Kyodo said the six parties had agreed to set up five working groups to resolve various issues.
"This is only one phase of denuclearisation. We're not done," said Hill.
Some criticism had already started, with John Bolton, former U.S. ambassador to the United Nations, saying the North should not be rewarded with "massive shipments of heavy fuel oil" for only partially dismantling its programme.
"It sends exactly the wrong signal to would-be proliferators around the world," Bolton told CNN.
Under the potential deal, North Korea offered to shut down its Yongbyon nuclear plant, which produces plutonium usable in nuclear weapons, according to many diplomats close to the talks.
A diplomatic source said North Korea had originally demanded the United States and four other countries provide it with 2 million tonnes of heavy fuel oil annually -- worth about $600 million -- and 2,000 megawatts of electricity.
The electricity, at an estimated cost of $8.55 billion over 10 years, would be about equal to North Korea's current output.
In September 2005, North Korea agreed to a joint statement sketching out the nuclear disarmament steps Pyongyang needed to take to secure fuel and economic aid, as well as political acceptance from its key adversary, the United States.
But the negotiations lost momentum after Washington accused the North of counterfeiting U.S. currency and other illicit activities. Pyongyang boycotted the talks until worldwide condemnation of its nuclear test drew it back in December.
(Additional reporting by Ben Blanchard, Nick Macfie, Lindsay Beck and Teruaki Ueno in Beijing, and by Isabel Reynolds in Tokyo)
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