x Abu Dhabi, UAEWednesday 24 January 2018

China hunting for energy resources in the Arctic

China may not itself have a coastline that stretches to the Arctic, but that is not putting the country off trying to secure a share of the energy assets that lie within the area.

The research ship Polarstern sails through Artic ice.
The research ship Polarstern sails through Artic ice.

BEIJING // The pristine waters and ice sheets of the Arctic have long captured the imagination of explorers, but with global warming causing large-scale melting and opening up the region for resource extraction, interest is now also growing among governments and energy giants.

Chief among the outside players is China, which has a burning need for new sources of energy to fuel an economy that is the world's second-largest and which continues to grow at more than nine per cent a year.

China may not itself have a coastline that stretches to the Arctic, but that is not putting the country off trying to secure a share of the energy assets that lie within the area.

"The Chinese are very interested," said Robert Huebert, associate director of the Centre for Military and Strategic Studies at the University of Calgary in Canada.

"Not only are the Chinese very serious, they are willing to invest considerable resources. They have the money to back it up."

Two months ago, Nasa and University of Colorado researchers found summer levels of ice in the Arctic Sea had fallen to the second-lowest level on record. Since 1979, the amount of ice during the summer has fallen 12 per cent.

"The sea ice is not only declining; the pace of the decline is becoming more drastic," Matt Meier, of the University of Calgary's National Snow and Ice Data Centre, said in a recent interview.

While environmental changes threaten the region's wildlife, they create new opportunities for shipping routes and oil and gas projects that would not have been feasible before. Once inaccessible energy deposits are becoming ripe for exploitation.

As well as being rich in mineral supplies, the Arctic is believed to hold about 13 per cent of the world's undiscovered oil and about 30 per cent of its undiscovered gas reserves.

Also of interest are fishing grounds and shipping lanes, including the North-West Passage, which links the Atlantic and Pacific oceans via the Arctic Ocean and which is becoming fully navigable in summer. The passage offers a much shorter link between East Asia and North America, of great value to a major exporter such as China.

The chance to conduct scientific research that may shed light on the effects of global warming is also luring China to the Arctic.

"The Arctic has moved up the agenda not only in the Arctic states, but among others who see the opportunities of a more accessible Arctic, including China," Friis Arne Petersen, Denmark's former permanent secretary of state for foreign affairs, now the ambassador to China, told journalists recently at the Danish Embassy in Bejing.

Beijing plans three research expeditions to the region over the next four years and is building a second icebreaker.

"They want to expand their base for oil and gas. They're not coming in to take over, but they want to be a player from an economic perspective," said Mr Huebert.

"[Also] they expect to see security issues arise in the Arctic and they need to understand what they're doing to protect their interests."

The Arctic Council, made up of the eight countries surrounding the Arctic, helps govern the area. China is set to become a permanent observer, a development thought likely to help ensure Beijing respects regulations.

"It is clear that China has an agenda and is looking to use existing regimes to advance its interests at the multilateral and bilateral level," wrote Nong Hong, a postdoctoral fellow with the University of Alberta's China Institute, in a paper published by the Journal of Energy Security this year.

There are tensions between some Arctic states over boundaries, which determine which countries have rights to resources within their exclusive economic zones, although these are more likely to be resolved through joint ventures than conflict.

Similarly, China is likely to forge alliances with countries with Arctic territory to gain access to resources. One of its oil companies has already signed a deal with Russian interests for energy supplies.

China's willingness to invest in overseas energy projects is well proven - it has pumped more than more than Can$12 billion (Dh43.4 billion) into the Canadian oil industry alone during the past three years - with Chinese investors "willing to pay a premium" as Mr Huebert puts it.

China's investment power will "absolutely" ensure it becomes a key Arctic player.

"They have made it very clear ... they're interested. They have the money to back it up," said Mr Huebert.