Climate Change: Heating up Arctic competition

Climate Change: Heating up Arctic competition

Melting sea ice is revitalizing the Arctic’s geopolitical importance. Russia is proactively developing the area with the help of the Chinese government and has more bases than any other nation. Western states are looking to respond and economic competition has already begun, further militarization is likely to follow suit.

In 2017, merchant ships began sailing the Arctic’s promising Northern Sea Route (NSR) without icebreaker escort. Previously forced to sail via the Suez Canal, shipments from Europe to Asia ranged up to 21,000 kilometers (13,000 miles), depending on locations of departure and arrival. Recently increased rates of melting sea ice have opened up this Arctic passageway, shortening the distance by over 8,000 kilometers (5,000 miles) and cutting transit time by up to 10-15 days. Although financially advantageous, current claims that this route is revolutionizing maritime trade are perhaps premature. Albeit without icebreaker escorts, ice-classed vessels are still required and the route is only traversable three months out of the year due to remaining ice coverage.

While the current utility of the region is lower than levels of investment might suggest, estimates predict that by 2030, the NSR will be traversable 9-months out of the year. In the Arctic, temperatures are rising at nearly double the rate of global averages. Projections analyzing the next 50 years estimate a rise of 3-4°C, predicting the region may even be completely free of ice within the next two decades. In addition to the forecasted increase in maritime traffic, the Arctic region boasts 15% of the world’s remaining oil, 30% of its natural gas deposits, and roughly 20% of its liquefied natural gas (LNG). States with a vested interest in the region are well underway in preparing themselves for the future – noteworthy among them being the Russian Federation.

Sino-Russian relations

As the Arctic Sea ice melts, an additional opportunity will present itself beyond exploiting the Northern Sea Route – resource extraction. Although consistently making claims for additional Arctic territory, in accordance with international law, Russia is entitled to an exclusive economic zone (EEZ) of 200 nautical miles adjacent to its coast. Gazprom and Rosneft, Russia’s two largest oil and gas companies have been given exclusive rights by the Kremlin to drilling operations in the Russian Arctic. In compliance with the terms to this contract, however, the companies are required to complete a “significant amount of exploration,” which, with every new well they drill, costs them around 500 million roubles ($7.8 million).

Following Russia’s illegal annexation of the Crimean Peninsula in 2014, and the ensuing war in Donbas with Ukraine, U.S. and EU sanctions, along with the drop in global oil prices, have made these projects financially unfeasible in the short-term. In addition to other individuals and corporations, the sanctions have targeted Gazprom and Rosneft, restricting cooperation with Western businesses, prohibiting the transfer of any technology for deep oil production (beyond 150 meters) or the exploration and development of the Arctic shelf shale oil reserves.

Due to these sanctions, and the isolating decisions Western countries have taken, Russia has become more strategically eastward leaning. Since 2014, it has increased efforts towards bridging partnerships throughout the Middle East, North Africa, and Asia, especially with China. Considering itself a “Near-Arctic State,” the Chinese government has taken advantage of this opportunity and has begun financing Russia’s operations through its state-owned enterprise, the Chinese National Petroleum Corporation (CNPC). In 2014, a contract was signed between Gazprom and CNPC, ensuring $400 billion of Russia’s gas would be supplied to China over the next 30 years. CNPC also began financing Rosneft to the sum of $500 billion, resulting in Russia surpassing Saudi Arabia as China’s main supplier of oil. CNPC has even acquired a spot on the board of Rosneft, thereby influencing any future decision making. Showcasing China’s direct role in Russia’s Arctic operations, last year Gazprom deployed a Chinese Nanhai-8 drilling rig to Kola Bay. More recently, last December the Yamal LNG plant became fully operational. Costing $27 billion, the project was a joint venture between Russia’s Novatek, France’s energy company Total, and the China National Petroleum Company. CNPC owns roughly 20%, and China’s Silk Road Fund holds ownership over an additional 10%.

As cooperation continues, Moscow will likely use its influence in the Arctic to transform the Northern Sea Route into what Kremlin officials have referred to as the “Cold Silk Road” within China’s overarching Belt and Road Initiative (BRI). In the short-term, the NSR will allow Russia to expedite its shipments of LNG to China from the Yamal fields. In the long-term, the Cold Silk Road may potentially alleviate the Chinese government of a critical security issue – their dependence on the Strait of Malacca. Considering it their “maritime Achilles heel,” the 890 kilometer (550 mile) strait, linking the Indian and Pacific Oceans, represents over half of its oil imports from the Middle East. With the potential to largely shift global trade and security, the full effects remain to be seen.

Moving forward: shifting Arctic security environment

Where economic promise lies, efforts to secure it will follow. Bolstering their military presence in the region, Russia has been repairing and rebuilding old Soviet infrastructure, along with constructing new bases. As of late 2015, Moscow maintains six military installations throughout Russia’s northern coastline and outlying Arctic islands – more than any other country. Given the region’s importance in terms of energy security, global trade, and power projection, Russia’s Defense Minister, Sergey Shoygu stated that the region is “an integral part of the general policy to guarantee national security.” Russian Deputy Prime Minister Dmitry Rogozin claimed, “It is our territory, it is our shelf, and we’ll provide its security. And we will make money there.” Static as of late, what Russia considers to be its territory in the future remains to be seen. Current investments in technologies such as Arctic-optimized helicopters and mobile power plants will logistically allow Russia to maintain its claims in the future.

The United States and its NATO allies currently lack a well-developed strategy to counter the Sino-Russian presence. Seeking to meet these attempts at geo-political supremacy in the Arctic, their actions hold the potential to intensify the situation. Regarding China, the government’s economic support for the Russians will presumably continue in to the future. This support is likely to remain economic because as a matter of political practice, Beijing is risk averse in appearing aggressive militarily. China’s activities in the Arctic could most aptly be described as opportunistic, and it is not in its interest to become involved in escalating U.S.-Russian hostilities. In the coming years, expect to see a rise in Western involvement in the Arctic, reflexive efforts by the Kremlin to rebuke such attempts, and China, acting as financier – watching it all play out.

About Author

Jonathan Hall

Jonathan Hall is a GRI Junior Analyst, focusing on Eurasian geopolitics, military affairs, and emerging technologies. He holds an M.A. in International Relations from Central European University and dual bachelor's degrees from Florida State University where he studied International Affairs, Russian, and Criminology.