Staunton, November 27 – China’s National Petroleum Corporation has reached an agreement with Sovcomflot that will dramatically expand China’s presence on the increasingly important Northern Sea Route, an accord that appears likely to mean oil and gas recovered from the Arctic will flow to China rather than anywhere else.
According a Sovcomflot press release last Monday, the two companies have “agreed on the format for the coordination in the utilization of the transportation potential of the Northern Sea Route,” in the first instance transshipment of petroleum from elsewhere and ultimately oil and gas extracted from the Arctic (www.sovcomflot.ru/npage.aspx?did=75963 and www.barentsobserver.com/chinas-new-foothold-on-northern-sea-route.4851792-116320.html).
The accord, which as Barents Observer notes, “was signed in the presence of [Russian] Deputy Prime Minister Igor Sechin” and Chinese Vice Premier Wang Qishan,” was described as “part of a long-term partnership strategy,” one that will make China a leading player in the Arctic region.
Chinese ships transversed the route several times this past shipping season, and according to Barents Observer, “as many as 15 … have applied for Russian icebreaker assistance” for the 2011 season, a number that if confirmed would make China the largest presence on this route of any country.
Again, according to that news service, “China will continue to be the main destination of goods shipped along the Northern Sea Route. That regards [not only] trans-shipments, but [also] to a certain extent Russian goods shipped from Arctic ports.” Moreover, “it is likely that a significant part of oil and gas produced in the Russian Arctic will end up in China.”
This development is likely to have important consequences both inside Russia and internationally. On the one hand, Moscow has been working on a draft bill to regulate such shipping since last spring, although the Chinese agreement limits what that bill might contain.
And on the other, this accord, together with China’s ship construction boom, including icebreakers, means that Beijing is rapidly becoming a major Arctic power even though it has no border on the northern ocean and even though most of the negotiations about the Far North have not involved China in the past.
Moscow’s decision to sign this agreement with the Chinese petroleum company thus creates a new reality that both Russians fearful of China’s pressure from the south and other Arctic powers self-confident that traditional ways of doing business can be continued into the future will now be forced to take into consideration.