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Tunnel linked to looming North Korea nuclear test? South Korea thinks so

South Korean intelligence officials say North Korea may be preparing for a third underground nuclear test. The possible test comes at the same time as North Korea is poised to launch a satellite. NBC's Richard Engel reports.

Updated at 8:35 a.m. ET: Recent satellite images show North Korea is digging a new underground tunnel in what appears to be preparation for a third nuclear test, according to South Korean intelligence officials.

The excavation at North Korea's northeast Punggye-ri site, where nuclear tests were conducted in 2006 and 2009, is in its final stages, according to a report by intelligence officials that was shared Monday with The Associated Press.

Its release comes as North Korea prepares to launch a long-range rocket with an observation satellite that Washington and others say is a cover for testing missile technology that could be used to fire on the United States.

North Korea shows off its launch pad, satellite

Observers fear a repeat of 2009, when international criticism of the North's last long-range rocket launch prompted Pyongyang to walk away from nuclear disarmament negotiations and, weeks later, conduct its second nuclear test. A year later, 50 South Korean were killed in attacks blamed on the North.

The U.S. isn't nervous about the satellite North Korea will launch, but the rocket that will launch it. NBC's Richard Engel reports.

"North Korea is covertly preparing for a third nuclear test, which would be another grave provocation," said the report, which cited U.S. commercial satellite photos taken April 1. "North Korea is digging up a new underground tunnel at the Punggye-ri nuclear test site, in addition to its existing two underground tunnels, and it has been confirmed that the excavation works are in the final stages."

Inside North Korea: Closely watched rocket launch poses risks

Dirt believed to have been brought from other areas is piled at the tunnel entrance, the report said, something experts say is needed to fill up underground tunnels before a nuclear test. The dirt indicates a "high possibility" North Korea will stage a nuclear test, the report said, as plugging tunnels was the final step taken during its two previous nuclear tests.

A U.S. official told NBC News it was possible that North Korea could be about to test a thermonuclear weapon, dozens of times more powerful than the weapons they have tested in the past. The North has carried out significant research into both "boosted fission" and thermonuclear weapons development in recent years. However, without testing, the North could not be certain that such a weapon is reliable.

North Korea announced plans last month to launch the satellite using a three-stage rocket during mid-April celebrations of the 100th anniversary of the birth of North Korean founder Kim Il Sung.

Bobby Yip / Reuters

A soldier stands guard in front of the Unha-3 (Milky Way 3) rocket sitting on a launch pad during a guided media tour by North Korean authorities northwest of Pyongyang on Sunday.

The U.S., Japan, Britain and other nations have urged North Korea to cancel the launch, warning that firing the long-range rocket would violate U.N. resolutions and North Korea's promise to refrain from engaging in nuclear and missile activity.

"Don't do it" is the United States' response to reports that North Korea is about to launch a nuclear weapons test, State Department spokesperson Victoria Nuland said at a briefing Monday.

"North Korea's launch of a missile would be highly provocative, it would pose a threat to regional security, and it will be inconsistent with its recent undertakings to refrain from any kind of long-range missile launches," Nuland said, adding that a launch would also violate two United Nations Security Council resolutions.

Pyongyang says the rocket will only carry a weather satellite, but South Korea and the United States say it is a test of a ballistic missile. And although the risk of it veering off course is low, guidance remains its weakest point.

In a rare move, reporters -- including NBC News' Richard Engel -- were taken to the new Sohae launch station, close to the border with China, where work was in progress to ready the 100-foot high Unha-3 rocket and its satellite.

David Guttenfelder / AP

In this March 9, 2011 photo, a girl plays the piano inside the Changgwang Elementary School in Pyongyang, North Korea. (AP Photo/David Guttenfelder)

The three-stage rocket was on the launch platform, indicating the launch is likely between April 12-16.

"Supreme Commander Kim Jong Un made a very bold decision, that is why you are allowed to be this close to the launch site," site director Jang Myong Jin told visiting foreign journalists on Sunday.

However, NBC's Engel tweeted that North Korea seemed to be giving the press access "to deflect criticism against the rocket launch, to show it has nothing to hide."

PhotoBlog: Images from the launch site

The second stage booster is planned to separate in the seas to the west of the Philippines, about 1,860 miles from the launch site, and experts say that represents the first possible landfall for the rocket if things go wrong.

If North Korea does achieve a successful separation of the third stage -- something it says it achieved in 2009, but most experts say failed to put a previous satellite into orbit --  that would show it had improved its technology and the capacity to produce a missile that could carry an intercontinental nuclear warhead.

North Korea will launch what is being described as a small observation satellite within days. NBC's Richard Engel reports.

Pyongyang has also shifted its launch site, and the new, more sophisticated site on the west of the Korean peninsula reduces the risk of debris falling on Japan, which was overflown in a previous test-launch of a missile.

The new rocket is believed to have a design range of more than 4,160 miles, and can carry a payload of up to 2,204 pounds.

At its closest point, Alaska in the United States is about 3,100 miles from North Korea.

Author Victor Cha talks about the nuclear future of North Korea and the growing concern that the country is about to launch a long-range missile test.

While North Korea's 23 million people live in poverty and many are at risk of malnutrition, the prestige of developing rocket technology and nuclear weapons capacity is the most important issue for Pyongyang, which sees it as a deterrent against invasion.

The North is believed to have stockpiled enough fissile material to manufacture up to 10 nuclear bombs.

Government officials in South Korea have calculated the North is spending $19 million on this launch.

NBC News' Richard Engel and Bob Windrem, The Associated Press, Reuters and msnbc.com staff contributed to this report.

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