China and Russia jointly transport natural gas through the Arctic

According to an article published on the website of the Wall Street Journal on June 11, through a joint venture between Cosco Shipping Holdings Ltd., China’s largest ocean transportation company, and Hyundai Merchant Shipping, a Russian shipping giant, China is moving into the Arctic shipping sector in order to transport natural gas from Siberia to the western and Asian markets.

The article introduces that these companies will use more than a dozen icebreakers to transport LNG from Yamal LNG project in Russia to Nordic Europe, Japan, South Korea and China along the northern coast of Siberia. According to British Ship Price Assessment Corporation, COSCO Maritime Liquefied Natural Gas Investment Co., Ltd., a subsidiary of COSCO, will operate nine more similar icebreakers. A year ago, Beijing released its first white paper on Arctic policy. According to the white paper, China encourages enterprises to participate in the construction of Arctic waterway infrastructure, conduct commercial trial voyages according to law, and jointly build the “Silk Road on Ice” with all parties.

The article says that China hopes that the Arctic route will become part of the “one belt” initiative, which aims to connect Asia and Europe through ocean, rail and road networks. In 2013, China became an official observer of the Arctic Council. The Arctic Council is an intergovernmental forum composed of the United States, Canada, Russia, Denmark, Norway, Sweden, Finland and Iceland. It mainly discusses the development issues and navigation rights arising from the melting of Arctic ice.

According to the article, the United States, Russia, Canada, Denmark and Norway all claim the right to use the Arctic waterway, while China regards investing in the Arctic as a top priority to promote its energy and shipping development.

As China moves from coal to cleaner fuels, it is expected to overtake Japan as the world’s largest importer of liquefied natural gas this year.

The article quotes a Chinese shipping executive as saying: “We hope to get about 4 million tons of LNG a year from the Yamal project. We also hope to transport containers via Arctic routes, because warming temperatures melt the ice and make navigation easier.

At the same time that China and Russia reached an agreement, Russian officials announced that Sergei Frank, chief executive of Russian Modern Merchant Shipping Company, would be the head of a new Arctic Route Committee. He said that the transportation and logistics of the project will be integrated into a platform to optimize shipping, port berthing and inland transportation of liquefied natural gas.

Frank also said that the volume of cargo transported through the Arctic route was “increasing in geometric progression”, and that more containers and ordinary cargo ships would travel between Asia and Europe through the Arctic route in the future to save time compared with traditional routes via the Suez Canal.