Arctic trade route opens - by China's shipping giant Cosco

Discussion in 'China' started by amoy, Aug 11, 2013.

  1. amoy

    amoy Senior Member Senior Member

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    China’s New Silk Road and the Arctic
    Could the Belt and Road extend to the Arctic region?

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    Image Credit: Wikimedia Commons/ Газпром нефть

    The first Belt and Road Forum for International Cooperation closed in Beijing on May 15. The forum attracted 29 heads of state and government and delivered a series of cooperation agreements. This forum is seen by the Chinese government as a concrete move to revive the ancient Silk Road. The signature foreign policy initiative of Chinese President Xi Jinping, the Belt and Road, is of unprecedented geographical and financial scope.

    Against this background, China has been showing strong interest in the resource-rich Arctic. Xi visited Finland before his state visit to the United States in April and stopped by Alaska on the way back to China. Earlier, on March 29, Chinese Vice Premier Wang Yang attended the opening ceremony of the fourth International Arctic Forum in Arkhangelsk, Russia and gave a speech which further elaborates China’s Arctic policy objectives. The question, therefore, is whether the Belt and Road Initiative, arguably the largest overseas investment drive ever launched by a single country, will help China achieve its Arctic policy goals.

    The three main pillars of China’s Arctic policy are respect, cooperation, and sustainability.

    The starting point of China’s engagement with the Arctic is mutual respect: China recognizes Arctic states’ sovereignty and sovereign rights, while the Arctic states should respect China’s legitimate rights in the Arctic under international law, such as freedom of navigation.

    Cooperation for win-win outcomes is the key pillar of China’s Arctic policy. The Belt and Road Initiative could potentially help operationalize this objective. More than 60 countries, listed by China, are involved in the Belt and Road, and most of the countries are China’s neighbors. Russia is one of China’s most important partners in the Belt and Road Initiative, especially when it comes to the Silk Road Economic Belt in Eurasia (the Belt). Russia so far provides the main link between the Belt and Road and the Arctic.

    The Silk Road Fund, established by China on December 29, 2014, holds a 9.9 percent share of the Yamal LNG project, a large liquefied natural gas project located in the Russian Arctic, while the China National Petroleum Company holds 20 percent, Novatek, Russia’s second-largest natural gas producer, 50.1 percent, and French oil giant Total, 20 percent. If all goes well, the Yamal LNG Project could be a convincing example for China’s Belt and Road Initiative to invest infrastructure projects in other part of the Arctic.

    Nordic countries have also expressed interest in cooperating with China in the Arctic. For example, Finland and China agreed during Xi’s visit that the two countries will intensify economic and technological cooperation in the fields of arctic marine industry. After the normalization of bilateral relations between Norway and China, it is expected that the two countries’ Arctic cooperation will grow significantly. Although the Belt and Road Initiative does not include Nordic countries, Denmark, Norway, Finland, Sweden, and Iceland are members of the China-initiated Asian Infrastructure Investment Bank (AIIB) (Canada, another Arctic state, is a prospective member). The AIIB serves as a financing arm of the Belt and Road. By joining the AIIB, most Arctic states are able to collaborate with China’s Belt and Road Initiative through this platform.

    However, China’s Belt and Road Initiative does face challenges, particularly in a vulnerable environment such as the Arctic. The protection of the Arctic environment is a key concern for Arctic states. Despite being interested in Arctic cooperation with China, Finland stated in the Finland-China Joint Declaration that “given the vulnerability of the Arctic environment, the two sides shared the view that economic activities in the Arctic area should take into full consideration the protection and sustainable use of its natural resources.” Environmental concerns were reiterated in the Arctic Council’s latest Ministerial Meeting through the final Fairbanks Declaration 2017.

    As part of the effort to establish a legal framework for the Belt and Road Initiative, the Chinese Ministry of Environmental Protection published a non-binding Guideline for Achieving Green Belt and Road on April 26, 2017. It states that the Chinese government will take responsibility to regulate Chinese investment in foreign countries, with a focus on the protection of biodiversity and the environment. As a country that is committed to supporting the United Nations’ Sustainable Development Goals, China emphasizes “sustainability” as one of its Arctic policy objectives. China realizes that it is important to balance protection and development in the Arctic. Nevertheless, it remains to be seen how such a balance could be reached. To achieve sustainability would be crucial for the success of the Belt and Road Initiative in the Arctic.

    In short, the Belt and Road Initiative presents significant opportunities for the Arctic, though risks do exist. The Belt and Road Initiative could provide tools for China to achieve its Arctic policy objectives. Meanwhile, Arctic states need to consider the best way to engage China so that they might benefit from this huge investment while avoiding possible environmental problems.
     
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  2. amoy

    amoy Senior Member Senior Member

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    The $27 billion Yamal development has advanced despite concerns it would be hurt by U.S. sanctions levied against Novatek in 2014 after Russia annexed Crimea. Chinese lenders agreed to provide $12 billion to the project last year after CNPC bought a 20 percent stake in the venture. China’s Silk Road Fund holds 9.9 percent.

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    The ice-classed LNG carrier Christophe de Margerie. File photo: Shutterstock / Koptyaev Igor
    Russia's Novatek launches Yamal LNG project, 1st cargo loading set for Friday

    Moscow (Platts)--5 Dec 2017 724 am EST/1224 GMT

    Russia's Novatek said Tuesday that the Yamal LNG project has commenced producing at its first train, with the first cargo scheduled for loading on Friday.

    "The first cargo loading is scheduled on 8 December 2017 at the Sabetta port using the first Arc7 ice-class LNG tanker named the Christophe de Margerie," Novatek said in a statement.

    The cargo is planned for delivery to China via the Northern Sea Route, a source said earlier.

    The project is located on the remote Yamal Peninsula and consists of three trains, each with nameplate capacity of 5.5 million mt/year of LNG.

    The second and third trains are expected for launch in the third quarter of 2018 and the first quarter of 2019, respectively, ahead of the initial plan.

    "The commencement of LNG production begins a new chapter in our corporate history," Novatek CEO Leonid Mikhelson was quoted as saying in the statement. "Many contractors and suppliers from Russia and abroad were involved in this project...We are grateful to all our partners, contractors and shareholders for the joint work on the way to the successful start of this project on time and on budget according to our FID schedule."

    Novatek owns a 51% stake in Yamal LNG and is developing the project with France's Total and China's CNPC.

    It also plans to build a fourth train, with capacity of 1 million mt/year of LNG, in order to ensure maximum efficiency for the project and the corresponding infrastructure in the area. It is also considering building another LNG project, Arctic-2, in the area.

    Yamal LNG is the second producing LNG project in Russia. The first one, within the Gazprom-led Sakhalin-2 project, has a capacity of 9.6 million mt/year.


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  3. Dark Sorrow

    Dark Sorrow Respected Member Senior Member

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    @amoy
    Sir,
    What is the expected cost saving??? What implication will this have on China Europe rail link and CPEC trade route???
     
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  4. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Chinese are paranoid they know their trade is going to be targeted so anything is given a shot
     
  5. amoy

    amoy Senior Member Senior Member

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    Cosco Shipping, Sovcomflot, Novatek and Silk Road Fund have inked an agreement to set up and Arctic shipping joint venture to manage icebreaking LNG carriers.

    http://www.seatrade-maritime.com/ne...road-fund-in-arctic-lng-shipping-venture.html

    The agreement to establish the Maritime Arctic Transport (MArT) joint venture was signed at the St. Petersburg International Economic Forum.

    The joint venture will focus on managing Arctic ice-class vessels, both existing and new ships, for Novatek LNG projects including Yamal LNG and Arctic LNG 2. The joint venture will cover shipping fron Arctic zone of the Russian Federation to the Asia-Pacific region, as well as organising transit cargo traffic along the Northern Sea Route between Asia and Western Europe.
     

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