China Daily

CNPC takes major step in Arctic gas

- By ZHENG XIN in Sabetta, Russia

China is increasing its presence in the Arctic region’s energy industry.

The country’s largest energy group, China National Petroleum Corp, is the latest mainland company to venture into the region.

It is participat­ing in the Yamal liquefied natural gas or LNG project, one of the most complex of its kind.

CNPC said it is willing to participat­e in more such collaborat­ive ventures to explore Arctic oil and gas assets, to further beef up its gas reserves.

Until recently, there has been no large-scale exploratio­n by Chinese firms in the frozen land due to Arctic countries’ protection­ist policy.

But analysts said Chinese energy giants’ efforts in recent years to increase their presence in the Arctic have been a success, and have strategic importance.

The current projects play a strategic role, said Li Li, energy research director at ICIS China, a consulting company that provides analysis of China’s energy market.

Many countries are interested in the massive oil and gas reserves in the far north. However, only few industry giants, such as CNPC, China National Offshore Oil Corp and China Petrochemi­cal Corp, are qualified for the difficult and expensive game of energy exploratio­n, she said.

In 2013, China was accorded “observer” status in the Arctic Council. That symbolized an unspoken acceptance of Beijing’s presence in the region. Since then, China’s visibility has increased.

CNOOC was the first Chinese oil company to enter the Arctic by partnering Icelandic company Eykon Energy.

Before CNPC secured a 20 percent stake in the Yamal LNG project from Novatek in 2014, Sinopec Group, Asia’s top refiner, had evinced interest in the region.

Sinopec also held preliminar­y talks with Iceland over oil exploratio­n off the north-

east coast of the Nordic country. It recently signed a cooperatio­n agreement with the Icelandic government for research and developmen­t of geothermal studies.

According to Li, as US and European energy giants dominate the North Sea and the Gulf of Mexico, the Arctic has become a precious land for Chinese companies.

Despite technical challenges and the arduous Arctic weather, participat­ion in the polar region gives China a foothold in the resource-rich area. This could help beef up exploratio­n and production, she said.

Despite the recent strengthen­ing of relations between China and Russia, Li forecast no rapid expansion in the short term.

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