China Cozies Up to Canada in Move for Arctic Resources

Posted: 15th February 2013

There has been a fair amount of consideration given recently to investment, particularly by China, in Arctic energy assets. Some of the commentary is more inflammatory from a defense perspective (here and here [PDF]) than others. The latter piece from the Economist even lauds the existing state of cooperation led by the 8-member Arctic Council.

Events more closely aligning China and Russia have been well reported including a formal energy partnership secured in December 2012. But what about the other countries making up the Arctic Council? Below is a timeline of diplomatic events between China and Arctic Council members aside from the United States and Russia.

Now, this is not showing corporate deals between organizations in each of those countries (we’ll get to that shortly), but we can spot one standout trend in government relations during the recent six month time period shown: discussions with Canada. These include Canadian PM Stephen Harper in September voicing support for plans for increasing cooperation between the two countries and Canadian Talisman Energy formalizing a $1.5B deal with Sinopec on the former’s North Sea business.

In the context of the increasing business between the two countries, it’s worth noting that Canada is set to take over the rotating chairmanship of the Arctic Council in May of 2013. It will hold the position for two years, and assumes the position as China and several other non-Arctic countries lobby for permanent observer status in the organization.

China has earned statements of confidence from members states like Denmark during recent weeks ahead of the vote set May. Today, we already know a bit about China’s plans for the Arctic.

Summarizing some of the events called out:

  • Last year, China sent an icebreaker — the red-hulled Xue Long, or Snow Dragon — into Canadian waters in the Arctic Ocean. Another of what are to soon be at least five of these specialized ships is to be operational in 2014.
  • China is planning two Arctic expeditions before 2015, according to the Chinese Arctic and Antarctic Administration.
  • TNK-BP signed an agreement in 2011 with Russia’s Transneft to deliver oil into the Zapolyarnoye-Purpe pipeline, which will connect the company’s Arctic deposits with the China-bound trunk. Operation is expected by 2016.

Of course, China isn’t the only one jockeying for position in the Arctic. There are a number of other operations set to begin over the next several years that will have significant geopolitical and economic implications. See below for a summary of the events set to take place including the launch of a new Russian icebreaker, ExxonMobil partnering with Russia’s Rosneft, Norwegian contractors expecting significant action over the next several years, and the maligned efforts by Shell to begin its operations off Alaska.

There’s undoubtedly much more to explore on this topic around joint ventures and investments from various corporate and state entities involved in Arctic energy expansion. You can work with the visualizations and data shown here by looking at the Recorded Future report on expansion and investment in the Arctic. But before you dig in, what are your thoughts on China’s efforts to gain a substantial foothold in the Arctic? Do you see the increasing ties with Canada serving as a disruptive force against the United States?

Reminder: Join Recorded Future on February 19 for a webcast on monitoring web-based open source information. Special guest speaker is retired Navy Captain and maritime cyber analyst, Scott Phillpott.