Page 19 - bne_newspaper_June_07_2019

Opinion
June 7, 2019 www.intellinews.com I Page 19
ALACO DISPATCHES:
US trails Russia and China in Arctic race
Rebecca Emerick and Yigal Chazan of Alaco
As global warming breaks the icy cover of the Arctic, Russia is increasingly collaborating with China in a race to exploit the region’s economic potential, tapping its considerable gas reserves and developing a new shipping channel that could slash the costs of trade between Europe and Asia.
The growing strategic partnership has alarmed the US which has questioned China’s economic interests and called out Russia’s “aggressive” actions in the Arctic. Concern has apparently stemmed from Russia’s growing military presence in the region and China’s use of financial muscle to exert economic influence on the littoral states.
The Arctic alliance between Moscow and Beijing is mutually beneficial with energy-hungry China eager to bolster its gas supplies and use Russia’s Northern Sea Route (NSR), a shipping channel running along the Siberian coast, cutting travel times between China and northern Europe by up to 40%. Russia, meanwhile, needs Chinese fi- nance and technical expertise since international sanctions have squeezed western sources.
On the face of it, the relationship seems equal. But in reality Russia, given its straitened circum- stances, is more beholden to China, which has used the dynamic to its advantage.
With the Arctic possessing about a fifth of the world’s untapped fossil fuel reserves, Beijing has supported gas extraction projects in northern Siberia, becoming the main foreign investor in Russia’s attempts to become a leading player
in the supply of Liquefied Natural Gas (LNG). In April, two Chinese state oil majors each ac-
Nuclear icebreaker "Yamal" on its way to the North Pole.
quired 10% stakes in the $20bn Arctic LNG 2,
a major new production plant on the Gydan Peninsula, scheduled for launch in 2023. The deals were announced at the Second Belt and Road Forum in Beijing. China already owns close to a third of the $27bn Yamal LNG project on the Yamal Peninsula, currently the principal facility, which came into operation in late 2017.
China’s contribution to natural resource explora- tion is also significant. In May, a Chinese drilling rig, which has been engaged in the Russian Arctic for over a decade, brought its total discovery of natural gas in the region to 1.2 trillion cubic metres with a large find in the Kara Sea, to the east of the Barents Sea.
Beijing has explicitly linked its $1 trillion Belt and Road Initiative, a series of economic and trans- port corridors running between China and the West, with the NSR and has channelled foreign direct investment into Arctic littoral states, such as Greenland and Iceland, as part of what it has dubbed the ‘Polar Silk Road’.
For now, the NSR is seemingly the focus of Beijing’s attention, as it will serve as a conduit for both Russian LNG exports to China and Chinese com- mercial shipping to northern Europe. The channel, which is only navigable for a few months of the year, carried a modest 20mn tonnes of freight last year, but Russia expects the figure to quadruple by 2025. China’s biggest shipper, COSCO, has already indi- cated that it will make more use of the Arctic route.
Should global warming continue to go unchecked, navigation will be possible for longer periods, helping Moscow to achieve its goal. So too will