A recent article in the venerable Arctic policy blog Cryopolitics, which discussed the failed attempt [paywall] by a Chinese construction firm to invest in the planned refurbishing of key airports in Greenland, suggested that this incident was but a minor setback in Beijing’s overall economic diplomacy in Nuuk, as well as the Arctic as a whole. This week, that view appeared to be further vindicated when it was announced that two major Chinese energy firms were expressing interest in investing in oil and gas surveying in Greenland when the island’s government begins to receive bids for licences to explore onshore blocks as of 2021. The blocks in question would be situated in the regions of Disko Island (Qeqertarsuaq) and the Nuussuaq Peninsula, both located on Greenland’s west coast.
According to Mr Aqqalu Jerimiassen, Greenland’s Industry and Energy Minister, both the China National Petroleum Corp. (CNPC) and China National Offshore Oil Corp. (CNOOC) had expressed early interest in bidding for the right to explore the regions, suggesting that Beijing has not given up its interest in jointly developing fossil fuels in parts of the Arctic beyond Russia. Thus far, China’s energy diplomacy has largely been centred on Siberia, including the Yamal liquefied natural gas (LNG) projects, but Chinese firms were less successful in the case of Iceland. In 2013, CNOOC had agreed to partner with an Icelandic and Norwegian firm to survey the Dreki region in the Atlantic-Arctic for oil and gas, but disappointing findings prompted the Chinese firm to withdraw from the project in January of this year.
In Alaska, another Chinese energy corporation, Sinopec, along with the Bank of China, and a division of the China Investment Corp (CIC), all reaffirmed their interest in developing LNG pipelines in the state, although it remains to be seen whether the intensifying Sino-American trade war may delay or even scuttle that agreement, which was first mooted in late 2017.
It has been estimated that the waters off of Greenland could contain significant fossil fuel deposits, with one 2010 study suggesting as much as fifty billion barrels of oil. However, previous surveys by European firms, including Cairn Energy of Scotland and Norway’s Statoil (now Equinor), recorded negligible supplies in the region. If the bids by CNOOC and CNPC do go forward, these would be the first [In Danish] such investments in oil and gas surveys in Greenland waters by Chinese companies.
The collapse of global energy prices after 2014 brought intense speculation about a ‘resource scramble’ in the Arctic to a near-halt. Yet oil prices have been inching upward, albeit erratically, this year, and the financial services firm Goldman Sachs suggested this week that global petrol prices might return to the US$80 per barrel mark by the end of 2018.
As well, there are short-term foreign policy challenges emerging which may adversely effect global prices and supply chains, including souring relations between the West and Saudi Arabia over the death of journalist Jamal Khashoggi, as well as a new set of US economic sanctions on oil-rich Venezuela which were announced this week by the Trump administration. Although a short-term return to the US$100-a-barrel period of five years ago is unlikely, (but not impossible), even a milder uptick in international energy prices could make the Arctic once again attractive for future oil and gas exploration, and Chinese firms have long expressed its interest in such endeavours.
The story does not end with Greenland oil, as Mr Jerimiassen had also suggested this week that Chinese firms have expressed interest in purchasing fresh water [In Danish] from Greenland’s melting glaciers, given ongoing Chinese demand for bottled drinking water and the high purity level of meltwater from the island’s ice stores.
This ‘oil and water’ news from Greenland further demonstrates that the island remains a key part of Beijing’s growing Arctic economic diplomacy. However, with both the US and Denmark continuing to be wary of Chinese investment in Greenland, it remains to be seen whether the island’s vast emerging resources will become a growing source of geo-strategic competition.