Rosneft and BP declined to "Arctic deal" - China has a chance to get oil and gas in the Arctic
Wednesday, 18 May 2011 07:02


On May 16, 2011 the British company BP and the Russian company Rosneft declined to joint exploration of the shelf in the Arctic, as the parties failed to reach consensus on the development of oil resources in the Arctic. Previously, the parties have already announced the postponement of the transaction. Originally set for completion of the transaction due to expire on April 14, 2011. But BP and Rosneft have decided to extend the deadline for the mutual exchange of shares for a month until May 16, 2011. Recall that in January 2011, Rosneft and BP signed a series of agreements on strategic cooperation and exchange of shares. In particular, the parties agreed to establish a strategic alliance for the development of oil fields in the Arctic, as well as the exchange of shares. Rosneft can receive 5% stake in BP, a British company - 9,5% stake in Rosneft. The conclusion of this deal would begin joint development of oil fields in the Arctic, the value of which, according to the U.S. Geological Survey (USGS), estimated at 90 billion barrels. In addition,in the Arctic may be 47.3 trillion. cu. meters of gas. Total in the Arctic, according to U.S. Geological Survey estimates, there are up to 13% of the world's undiscovered oil reserves and 30% of gas reserves. The U.S. Geological Survey also compiled data on stocks in the Arctic as belonging to different countries. The probability of finding oil and gas USGS assessed by comparing the Arctic regions with deposits with similar geologic conditions (in the USGS data base includes 95% open in the world oil and gas). Russia, according to USGS, has the largest sector among the Arctic countries .- hydrocarbon resources to the areas in which Russia already owns or on which claims to account for more than 250 billion barrels. oil and gas in oil equivalent. This is 60,1% of total reserves. Among the sectors in the Arctic are the largest aggregate reserves in the Western Siberian Basin - 3.6 billion barrels. oil, 18.4 trillion cubic meters. m. of gas and 20 billion barrels. condensate, which gives a total 132 billion barrels. oil and gas in oil equivalent. Followed by the Arctic shelf of Alaska (29 billion barrels. oil, 6.1 trillion cubic meters. of gas and 5 billion barrels. NGLs) and the eastern Barents Sea (7.4 billion barrels. Oil and 8.97 trillion cubic meters. M of gas and 1.4 billion barrels. NGLs). In addition, the fields in the Arctic have large deposits of coal, gold, silver, diamonds, titanium, copper and other minerals. But especially such major oil and gas fields have attracted the attention of many countries, including China. In China believe, that global warming and the subsequent melting of Arctic ice could bring considerable economic benefits. Firstly, after the melting of Arctic ice, fields of mineral resources become available, so now is the time to think about a place under the Arctic Sun. Secondly, when the ice will melt, the Arctic waters become navigable in the summer, and this is another benefit - a new sea route from Shanghai to Hamburg will be shorter than the traditional sea routes through the Suez Canal for more than six thoUSAnd miles and more secure - not likely to go Somali pirates will get and cheaper: because of pirate attacks on the southern route- the cost of insUrance of vessels increased by 10 times. Therefore, having no outlet on the coast of the Arctic, China is seeking alternative ways to gain access to the Arctic Ocean. Prospects for the development of Arctic fields have encouraged China to allocate more funds for research in the Arctic, which has already allowed to spend four China Arctic expeditions, China also opened its research stations on Svalbard. According to SIPRI, China has one of the strongest research programs to study the Arctic. And this despite the fact, that because of the global financial crisis, many Arctic countries have reduced the amount of funds, allocated to research in the Arctic. But China has managed to pass this difficult stage, moreover, in the near future in the Arctic will increase the intensity of not only academic and scientific research of China, but even the initial development of the Arctic. With this purpose in 1993, China has purchased in UKraine the world's largest non-nuclear-powered icebreaker, named after Xuelong ("Snow Dragon") (see a photo), which now conducts research in the Arctic waters. In addition, in China over the next few years developed a program to create own production of heavy-duty icebreakers, the first of which should go into the water in 2013 Due to the fact, that China is not the Arctic country, China found itself at a disadvantage and China is seeking to secure for itself the legal basis for future activities in the Arctic. Currently, China has yet to temporary status of observer at the Arctic Council, an alliance comprising eight countries: Russia, Norway, Denmark, Iceland, Canada, USA, Finland and Sweden. However, China reveals a desire to participate more actively in the Arctic cooperation. On this occasion, Ambassador of China in Norway, Tang Guoqiang, said: "China is interested in stable development of the region, because changes in the Arctic ecosystem is directly affected by the climatic conditions in China." Norway has supported granting China permanent observer status in the organization. China is also expanding its cooperation with the Arctic countries. In 2010 the President of Iceland, said that China has expressed interest in Iceland as a potential logistical base in case, then global warming will send Chinese exports to Europe through the Arctic, shortening the path to 6000 kilometers, compared with the transit through the Suez Canal . After that, it was announced about the currency swap deal to $ 500 million between China and Iceland. Given the economic difficulties at that time in Iceland, it would be hard to find economic reasons for this transaction, without taking into account geopolitical motives, associated with Arctic fields. Also, all of a sudden, in the summer of 2010, a delegation from China visited the largest city within the Arctic Circle in the world- the Murmansk in Russia, where they signed a memorandum of understanding to establish sister-city relationship between the province of Hainan, China and the Murmansk Region, Russia. It should be noted that the Murmansk region - this is the only sister city of Hainan Province in Russia and Murmansk is a city with largest park in the Arctic for icebreakers. After that, since 2010, in the Chinese press began to appear regularly posts devoted to the Arctic, we present the most interesting of them. As said Lee Dzhenfu from Dalian Maritime University: "Who controls the Arctic routes, will oversee the global economy and international strategy. The majority of mineral fields of Arctic concentrated in the economic zones of countries connected to the Arctic, mostly in Russian. However, Russia has not the technology and resources for their development, so Russia can cooperate with China". According to Chinese Vice Foreign Minister: "The Arctic States should take into account " the interests of all people in the world, not just their own. " We have written on our website about situation, when Russian companies Rosneft and Transneft received multibillion loans from Chinese banks under guarantee oil supplies to China on the challenge of ESPO: Rosneft obtained a loan of $ 15 billion, the company "Transneft" - $ 10 billion, but after after the start of oil deliveries to China, the conflict appeared, involving non-payment by the Chinese side of oil supply in full, because of which the indebtedness of the Chinese side at more than $ 100 million. This situation will be discussed at the talks, which will be held in May 2011 and is very likely, that the possibility of repayment of this debt will be linked with the prospects of a new partnership oil companies of Russia and China in the Arctic area. Therefore, in the near future we should expect greater attention of China to Arctic area, it is possible, that the new partner of the Russian company Rosneft will be the company from China. 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