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Guest Post: China’s Arctic Strategy

Tyler Durden's picture





 

Submitted by Stephen Blank via The Diplomat,

China has certainly been busy since it won observer status at the May Arctic Council summit in Kiruna, Sweden.

First, Yu Zhengasheng, Chairman of China’s Political Consultative Conference, visited Finland, Sweden and Denmark with an eye to boosting general trade and cooperation, particularly in the Arctic.

China then announced an expanded research and scientific polar institute that will collaborate with Nordic research centers to study climate change, its impact and desired Arctic policies and legislation. With this, Beijing made clear it did not intend to be a passive member of the Council; it planned to have a real say in its future proceedings. China National Offshore Oil Corporation meanwhile announced a deal with Iceland’s Eykon Energy firm to explore off Iceland’s Southeast coast.

State-owned mining firm Sichan Xinue Mining has also agreed to finance a major international mining project at Greenland’s Isua iron-ore field. If this venture succeeds, other Chinese state-owned mining companies, such as Jiangxi Zhongrun Mining and Jiangxi Union Mining, which have prospected in Greenland but have not yet started production, would then join it to explore for gold and copper. And other projects like aluminum smelting are already taking shape or will begin, espeically if the Isua project is successful.

These moves come on top of recently announced deals with Rosneft and Gazprom to explore Arctic fields for oil and gas. At the recent Sino-Russian summit, China concluded a contract with Rosneft to triple the size of current oil deliveries to China to 900,000 BPD, putting it on a par with Saudi deliveries to China, according to a recent report in the Financial Times print edition.

But Rosneft won that contract only by accepting further huge Chinese loans of $25-30 billion as cash infusions and agreeing to facilitate the acquisition of oil and gas assets in Russia by Sinopec, an oil and gas company. In other words, as part of its huge energy deals in the Arctic and the Russian Far East (RFE), China has added to Rosneft’s already sizable indebtedness to China, going back to the 2009 deal for the East Siberia Pacific Ocean pipeline. This indebtedness and the size of the planned oil deliveries from Rosneft will give China substantial leverage in the region.

Rosneft will consequently consider Sinopec’s participation in its large-scale project in the RFE, namely the Eastern Petrochemical Refinery jointly established in 2007 by Rosneft and Sinopec’s rival CNPC, China National Petrochemical Corporation. While China will loan Rosneft $2 billion backed by 25 years of oil supply, Rosneft will boost oil exports to China by 800,000 metric tons this year. Annual exports may reach 31 million tons annually or 620,000 barrels a day, more than doubling present volumes.

Igor Sechin, Rosneft’s boss and Putin’s right-hand man, even hinted at going to 50 million tons per annum. Rosneft’s other deal deal with CNPC to drill in the Pechora and Barents Seas in the Arctic similarly highlights CNPC’s growing clout in global markets.

Gazprom also announced its intention to conclude a long-awaited gas deal with China in 2013 by signing a Memorandum of Understanding to that effect. That deal, too, might involve advance payments from China to an increasingly vulnerable Gazprom.

Given Russia’s equally strenuous efforts to explore and exploit the Arctic’s hydrocarbon and mineral resources, it is understandably unnerving for it and possibly other governments to see this flood of vigorous Chinese activity, which comes on top of the opening up of the Northern Sea Route to intercontinental trade from Europe to Asia. Certainly, it seems Moscow is concerned, even though it is Beijing’s “strategic partner.”

China is clearly after more than simply investment and trade opportunities as it continues to display its obsession with securing energy and other supplies where the U.S. Navy cannot or will not go. Beijing Review claimed that other actors were trying to exclude China, but by dint of enormous exertions and large outlays to finance energy infrastructure in Russia and Canada, as well as its own scientific program of Arctic research, “China has ultimately managed to reshuffle the Arctic balance of power in record time.”

More crassly, we might say that China has paid dearly for its newfound status. Still, it will achieve some tangible goals. For instance, in its deal with Iceland, China will not only gain real access to state-of-the-art Icelandic clean energy technologies, it will also acquire leverage and influence in Iceland itself and that influence, once Iceland joins the Council, will redound to China’s benefit.

But beyond even these considerable commercial and energy, investment and trade access benefits, China gains strategically in Northern Europe and Russia, if not Canada. It now possesses a venue where it can fully participate in addressing issues of climate change that could, if unchecked, affect China’s climate to extent of eroding its agricultural capacity or rendering it vulnerable to flooding because of its low-lying coast.

In addition, as the Northern Sea Route opens up as a cheaper alternative for transcontinental shipping and trade, Russia will almost certainly seek to establish an advantageous tariff regime; China can now make certain that Russia heeds its voice in setting those tariff rates.

China will also now have a secure footing from which it can defend what it will claim to be its “legitimate rights” in the Arctic. It is quite conceivable that China will now use that foothold to demand as well a voice in the resolution of Arctic territorial boundaries that are up for decision. In 2009-10 it had claimed that no state had sovereignty in the Arctic, a clear slap at Russian claims. Now, to join the Council, it had to repudiate that earlier position and state that it respected the sovereignty of all the states claiming territory in the Arctic but accept that the decision will be made in the future, a sharp contrast to its rigid insistence on its “core interests” and sovereignty in the Senkakus and the South China Sea. Indeed, given those claims on the seas adjacent to China, it had no choice but to recognize existing exclusive economic zones and boundaries if it wanted to be a member of the Council. Nonetheless, it now calls itself a “near-Arctic state” and an “Arctic stakeholder.”

Probably this is what is unnerving for Moscow. According to Interfax, Prime Minister Dmitry Medvedev, with no apparent cause, told an interviewer in Norway on June 4 that “China is trusted. But it is you and us who draw up the rules of the game, that is to say the Arctic states.” Medvedev went on to claim that while Moscow wants productive cooperation with all Council members, including China, and has purely “peaceful and pragmatic goals” there, only Arctic Council members should determine the rules on these questions because, “This is natural, this is our region, we live here. This is our native land.”

Unfortunately for Moscow, not only China but also the other new Asian members will seek to maximize their influence in the Council for many of the same reasons. The Arctic may be Russia’s home, but it can no longer be its castle.

 


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Thu, 06/20/2013 - 20:06 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Global warming.   A lie perpetrated by greedy scientists wanting grants.  Nothing to see here.  Move along.

Thu, 06/20/2013 - 21:30 | Link to Comment Aurora Ex Machina
Aurora Ex Machina's picture

Average USA salary: $80k. Senior geologist (energy industry) - $159k

Your trailer must give you some shitty ideas about what a decent wage is to think scientists are "raking in" that research grant money.

 

(And no, I'm not going to argue the point. You know nothing.)

Thu, 06/20/2013 - 21:44 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Everyone knows that scientists can't be trusted.  Hell, they would tell you the Earth revolves around the Sun and not vice-versa if it would help take down a Pope or something.  I take all of my advice from oil men and oligarchs who have my best interests at heart because they are productive.  

Thu, 06/20/2013 - 21:45 | Link to Comment Aurora Ex Machina
Aurora Ex Machina's picture

I'll junk myself for not knowing your snark levels. Busted to the bait, I'll admit it.

Thu, 06/20/2013 - 21:49 | Link to Comment LetThemEatRand
LetThemEatRand's picture

I almost feel like I deserve a MillionDollarBonus for that one!  I'm thinking double-wide with a view of the nice side of the dump.

Thu, 06/20/2013 - 22:14 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

I'm thinking double-wide with a view of the nice side of the dump.

...and a neighbor named Ray.

http://www.youtube.com/watch?v=MJ4EpHWVaR4

Thu, 06/20/2013 - 23:31 | Link to Comment moondog
moondog's picture

Trailer Park Boys!!!!! Bring em back!!

Thu, 06/20/2013 - 23:06 | Link to Comment prains
prains's picture

The mountain pine beetle (MPB) Dendroctonus ponderosae,

why has it existed for millenia only to now come out and move to eat the entire canadian soft wood lumber industry??

 

because the sub -30 degree celsius weather that always culled its herd each winter has disappeared for the last thirty years, so they never die, just multiply and eat_this is how global warming really works, slowly and cummulatively

unintended consequences, Glitchez!!! you will drink this one

Fri, 06/21/2013 - 00:31 | Link to Comment oddjob
oddjob's picture

'managing' forest fires is equally, if not more to blame, more unintended consequences.

Fri, 06/21/2013 - 00:45 | Link to Comment kchrisc
kchrisc's picture

Who the hell down arrowed that?!

Look: 99% of the earths atmosphere lies in the first 12 miles or so.

That 12 miles is about 2.371 billion cubic miles of atmosphere.

CO2 is .00035 of that or about 830,000 cubic miles.

By the "watermelons' " own insistence, we now know that humans burn about 3 to 4 cubic miles of "fossil" fuels a year. Assume 5 cubic miles and that all the emissions are CO2, though most of it is water.

That is not even a rounding error when compared with 830,000 cubic miles of CO2.

Now use 200 years for a time-frame and times it by 5 cubic miles and see that 1,000 cubic miles is also not even a rounding error.

Just another pol, crat and elite shitbowl of lies to subjugate and rob the people.

 

Let them compute the "carbon footprint" of my guillotine while waiting in line for their turn.

Fri, 06/21/2013 - 09:37 | Link to Comment CPL
CPL's picture

http://www.zengardner.com/the-shift-is-on-magnetic-north-pole-now-racing...

 

It's because of the poles, not global warming.  The north pole isn't where it was...and neither is the south pole.  It's a good thing though it's not a linear move, more of a spiral like a spinning top wobbling in a vaccum.

What the real concern is the methane and hydrogen sulfate that was trapped in the perma frost filling our atmosphere to cambrian levels.  China can have all the 'arctic' placement it wants...if it can keep a ship or a rig from sinking right to the bottom of the sea just like other locations unlocking methane and hydrogen sulfate.

http://bernews.com/2013/06/scientists-triangle-had-acute-case-of-gas/

It's now a certainity and a hazard.

Fri, 06/21/2013 - 12:07 | Link to Comment kchrisc
kchrisc's picture

It's "Pole Change!" Must outlaw and tax all magnets for the good of mankind don't you know.

"What's your magnetic footprint?!"

Thu, 06/20/2013 - 20:07 | Link to Comment davinci7_gis
davinci7_gis's picture

Yeah, and I heard Bass's video yesterday that said that China is opening up a new embassy in Iceland with 500 staff members! China is on the big oil war path!

Thu, 06/20/2013 - 20:09 | Link to Comment NoDebt
NoDebt's picture

Oh, HELL yeah they are.  They don't want to be reliant on importing it any more than they have to.

Thu, 06/20/2013 - 20:17 | Link to Comment DaveyJones
DaveyJones's picture

better than war, straight up money and hardware. Cheaper than our techniques, with less hatred and medical bills  

Thu, 06/20/2013 - 22:18 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

Going to be rough days for locals as the 'AnAnonymists' blob up with their Chinese citizenism.

Thu, 06/20/2013 - 21:48 | Link to Comment Aurora Ex Machina
Aurora Ex Machina's picture

That's actually a very worrying step.

Iceland only has 210 active military serving members. Their embassy is basically twice their numbers. The source is from Oct 5th 2012. Ahh, found the meat: 15th April 2013 - China <> Iceland sign FTA, 1st between China - European(ish) country. Telegraph.

Trade between China and the England-sized country of just over 315,000 people rose 21.1pc last year to $180m (£117m), according to the Chinese Ministry of Foreign Trade. Iceland exports mostly fish to China and imports Chinese products from ships to shoes. Ms Sigurdardottir has been keen to push Icelandic services and the island's geothermal energy potential.

Iceland has unique importance to China as it attempts to gain a foothold in the Arctic, where melting ice is opening passages for shipping and could create a boom in extraction of resources such as gas, oil, diamonds, gold and iron.

 

Comment: Looks like Denmark / UK should have played nice over those mackerel. No wonder that minke got pulled in, probably testing EU PR backlash for the potential Chinese market. Go diplomacy! Muppets. It also means that the aluminium smelting / golf course deals have more chance of running long term, which will shaft some beautiful country. Benin is the last stand, it would seem.

 

Thank you for that tip, I'd have missed that otherwise. Not great news, although I wish Iceland the best (of luck).

Thu, 06/20/2013 - 23:25 | Link to Comment prains
prains's picture

you're talking about Viking descendants against 90 pound rice eaters, they will be fed to the Greenland Sharks

 

http://planetsave.com/2013/06/02/greenland-shark-eats-a-polar-bear-sleep...

 

never doubt the resolve of a viking stranded on an inhospitable island

Thu, 06/20/2013 - 20:07 | Link to Comment NoDebt
NoDebt's picture

But China needs to get through their banking insolvency crisis first before they can take over the Arctic.

And, by the way, whadda we got?  A cuisinart?  Ludicrous speed!

 

Thu, 06/20/2013 - 20:19 | Link to Comment Bennie Noakes
Bennie Noakes's picture

But I heard that China is the new shale oil king:

http://www.zerohedge.com/news/2013-06-19/us-no-longer-king-shale-oil-gas

 

Thu, 06/20/2013 - 20:21 | Link to Comment starman
starman's picture

China will be the first ever producer of "snow cones" They currently working on other natural colors besides yellow.

Thu, 06/20/2013 - 20:23 | Link to Comment post turtle saver
post turtle saver's picture

The US Navy officially tells this article to suck it... http://www.history.navy.mil/branches/teach/ends/poles.htm

Thu, 06/20/2013 - 20:46 | Link to Comment Yes_Questions
Yes_Questions's picture

 

 

Yay!

OIL WARS 4EVA!

Thu, 06/20/2013 - 21:21 | Link to Comment robertocarlos
robertocarlos's picture

So sorry, this my garden now. Cold, so very cold.

Thu, 06/20/2013 - 21:51 | Link to Comment Atomizer
Atomizer's picture

Climate change or new CO2 slave taxation under a fraudulent claim? You decide for yourself.

 

Let’s start with a taxpayer funded propaganda website creating fear.

http://co2now.org/ 

How about looking at Co2 levels beyond a 200 day moving average.

http://worldview3.50webs.com/6globalwarming.html 

Our shrinking atmosphere has an impact on climate change, along with the sun. These con artist cannot control the sun, just make up lies blaming you that it’s all your fault!

Special News Edition: Connecting the Evidence 

This Arctic Strategy is an old USSR story tale rebranded into China. Even US used it to jawbone minimising shipping costs.

Fri, 06/21/2013 - 01:04 | Link to Comment ebworthen
ebworthen's picture

If climate change isn't real and we aren't responsible for it...that would mean we aren't omnicient...and we can't tax it.

Thu, 06/20/2013 - 22:32 | Link to Comment Tulpa
Tulpa's picture

"It now possesses a venue where it can fully participate in addressing issues of climate change that could, if unchecked, affect China’s climate to extent of eroding its agricultural capacity or rendering it vulnerable to flooding because of its low-lying coast."

Because international conferences have done so much to address climate change!  

People all around the world like full stomachs and warm beds, and the only scalable energy sources that can make that happen for large numbers of people are fossil fuels and nuclear.  Global warming isn't going to be solved without at least halving the global population...though that's something I'm sure the PRC would enjoy taking a shot at.

Thu, 06/20/2013 - 23:22 | Link to Comment Atomizer
Atomizer's picture


The WTO has been the hub of failure, tomorrow it will claim many other countries on borrowed promises to become a profitable industry. 

How Chinese Subsidies Changed the World 

This all started in 2009, with the NGO Copenhagen Treaty. It has been spawn under new names since then. Reverse the last 48 hours, review Berlin, Obama, Green Energy or Airline mergers who need to comply with the EU carbon tax regulations. Guess who pays? The traveler going to Europe. I love this new tax. Why? No traveler will spend a exise tax to float a broken European Union. Too many other places to go to spend your money. The US President doesn’t care, it cost $180,000 per hour to use Air Force One. Guess who will pay for this carbon tax? This dipshit will declare his excessive traveling as gained GDP.

Fri, 06/21/2013 - 01:02 | Link to Comment ebworthen
ebworthen's picture

If the Chinese get too uppity in Russia's north 40 they'll invite a nuke.

Fri, 06/21/2013 - 07:06 | Link to Comment mjk0259
mjk0259's picture

Lending large sums of money to Russians doesn't give you influence over them. More the other way round and almost no chance of it ever being paid back.

 

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