China’s CNOOC now only player in Iceland oil

Ithaca Energy and minor partners Petoro and Kolvetni have handed back their oil and gas exploration permit for a sector of the Icelandic Jan Mayen area after seismic exploration yielded disappointing results. Another license holder, Faroe Petroleum, had already given up already in late ’14. That leaves only one active license, whose operator and majority owner is China’s state-owned CNOOC (中海油), in partnership with local company Eykon and Norway’s Petoro.

CNOOC have been exploring in the area. Their local partner Eykon have talked of plans to continue exploring and shown optimism about the results so far. Eykon have a record of optimism on the probability of finding oil off Iceland, and have at different times aired estimates in the high gazillions. Judging by the consistent lack of interest in Iceland from oil majors, even when oil prices were high, no one in the industry shares that optimism. Except CNOOC of course.

For an older but deeper look into CNOOC and Icelandic oil, there’s always what I wrote back when they bought the license.

the 60% saga: update on Shenghe in Greenland

Two separate sources say Greenland Minerals and Energy, the Australian company that has agreed to sell a stake in a Greenland uranium and rare earth project to Shenghe 盛和 Resources, now denies the agreement includes an option for Shenghe to increase its interest to a controlling one once the project enters the development stage.

An option to acquire a controlling stake (up to 60%) in the Kvanefjeld (Kuannersuit in Greenlandic) project is discussed in clear terms in a Shenghe Shanghai Stock Exchange disclosure, as I was seemingly the first English-language source to report. The language suggests GME is not bound to sell Shenghe such a large share, should they ask for it.

The purchase option should be good news for GME, so it’s hard to see why they would deny it.

It’s been known for ever that some sort of more or less Chinese state-connected involvement would eventually begin in Kvanefjeld. GME had long had a non-binding agreement with a unit of China Nonferrous (中色); as explained in some detail in my post from last week, Shenghe’s main shareholders are also mostly state organs.

This information has now reached the mainstream media. Various experts quoted by Politiken draw (geo)political implications of the deal. Rear Admiral (kontreadmiral) Nils Wang, an Arctic expert with the Danish Defence College, expects the deal to attract attention in the US: “It’s very easy to interpret this not just as the classic Chinese-style long-term thinking, but also as two [the other one being General Nice (俊安集团) purchase of Isua] of China’s slowly creating for themselves in Greenland the same kind of soft-power influence they already have in Iceland”. In Greenland, Aaja Chemnitz Larsen of the opposition party Inuit Ataqatigiit (IA), talks of “a need to know how big an influence China can get over the project”, on which she intends to query the Greenlandic and Danish governments. So that’s already a Greenlandic politician and a Danish kontreadmiral for whom the 60% number and Shenghe’s state connections could be interesting data points.

more on Iceland’s representative at China Internet conference

Stundin reports on Iceland’s participation in the Wuzhen 乌镇 Internet conference last December. As I mentioned back then, Ragnar Baldursson, minister-counsellor at the country’s embassy in Beijing, had the honour of being the only Western representative quoted by Chinese state media as “highly praising” Xi Jinping’s opening speech.

Said media were understandably short of Western representatives to interview. Although several other countries sent embassy staff to the summit, Western governments seem to have tried to avoid endorsing an event meant to advance the Chinese state’s Internet control policies. Writing for the Chinese edition of the Financial Times, Cao Xin 曹辛 refers to a Dec 11 meeting at an undisclosed Beijing embassy, where EU, French, German and Japanese diplomats discussed the upcoming Wuzhen meeting and agreed not to take part in it. Regardless of whether the alleged meeting actually took place, the fact is that no Western leaders attended the event.

An Icelandic foreign ministry spokesperson told Stundin that the Chinese government had actually invited Iceland’s president to the summit, but that they decided to just send an embassy counsellor instead. That’s a bit more junior than a president, but the Chinese authorities might still appreciate that the Icelandic representative agreed to provide a soundbite to the People’s Daily. Although what he actually said was pretty inocuous, it was only to be expected that it would be spun as an endorsement of Xi’s ‘cyber sovereignty’ speech. Ragnar, the Icelandic minister-counsellor, is an old China hand and surely someone familiar with the habits of Chinese state media.

The foreign ministry statement adds that Ragnar was only there on the first day of the summit, and that “there was no discussion on censorship”.

Tempus fugit: Jahresrückblick 2015

Here’s a quick overview of what I’ve been up to in the last twelve months.

Greenland

Largely unnoticed by English and Danish-language media, Greenlandic officials visited China during 2015 to discuss not just mining, but also infrastructure projects. Greenland’s coalition agreed soon afterwards on plans to renew existing airports and build new ones, as well as a container port in Nuuk and new hydro-power plants.

Meanwhile, two mining projects which China Nonferrous (中色) has signed (no-strings-attached) agreements to develop and buy into are moving towards getting production permits: GME’s rare earth and uranium Kvanefjeld deposit and Ironbark’s Zn+Pb project at Citronen fjord. If they do go ahead and Nonfezza does get involved, China’s SOE would become (by far) the largest actor in Greenland mining, but it’s too early to toast to that yet (think ore prices, domestic opposition in the case of the uranium project).

For background on Chinese interest in Greenland’s ores, there’s my post from March for the CPI blog. A new post there gave an update as of December, including the remark that the Citronen fjord project could make China Nonferrous (and of course Ironbark) not just the world’s northernmost miner, but their (largely foreign, quite likely Chinese) staff the inhabitants of the northernmost human settlement on dry land at 83°N.

2015 started with news of General Nice (俊安集团) acquiring production rights for the once promising Isua iron ore project. I wrote a long read on that company’s rather peculiar history, including plenty of data you won’t find elsewhere (at least in a Western language). Later updates on General Nice are also worth a look if you follow what is still Greenland’s only Chinese production permit holder.

Russia

Russia’s recent ‘pivot’ perhaps could be more adequately described as ‘away from the West’ than ‘to Asia’; admittedly increased cooperation with China in some domains has been overspun, especially by Russian and Chinese state media, to make up for the fact that trade between the two countries, and crucially between Russia and Heilongjiang, has actually gone down rather drastically. But the fact that Russia, and especially the Far East, needs Chinese investment more than ever before, means potential Chinese investors are being offered better conditions by the Russians (and sometimes, indeed, accepting them).

The Sakha Republic (Yakutia), specifically, has been quite active in trying to attract Chinese investment, for projects such as, first of all, the bridge over the Lena in Yakutsk, but also others like the Tirekhtyakh Тирехтях lead mine at 69°N, to mention one nobody else seems to have reported in English. For more, go check my posts on Yakutia.

Meanwhile in Vladivostok, or actually near it, Russia’s largest casino had its grand opening. As it was to be expected, most customers were from Mainland China even before they started advertising there at all.

Iceland

Other than their projects in Greenland, China Nonferrous also have plans to build an aluminium smelter in Iceland. Their agreement is all non-binding and the plans didn’t look that serious at first, but (again unbeknownst to Western-language media) meetings in China in the last few months suggests they are planning to go ahead with the thing.

In July, car maker Geely 吉利 (Volvo’s parent) agreed to buy a stake in Carbon Recycling International, a methanol fuel producer.

Construction of the joint Chinese Icelandic aurora observatory is, to put it mildly, delayed, but it has finally started and should be working next autumn.

CNOOC (中海油) and local partner Eykon Energy have started exploring for oil in the Icelandic sector of the Jan Mayen area (Drekasvæði).

Ragnar Baldursson, Iceland’s representative at the Wuzhen internet conference last month, had the honour to become the only Western official to be quoted by Chinese media at the event. His comments (actually quite noncommittal) were spun as “high praise” for Xi Jinping’s ‘cyber sovereignty’, freedom-and-order speech.

Norway

The Hålogaland bridge in northern Norway is already being built. The contractor for the steelwork is SRBG (四川路桥), a Sichuan SOE that won that tender in rather peculiar ways. Peculiar enough, in fact, that two people ended up in jail in Germany as a result. My modest investigation on the case is still the only English source of information on what’s the first Chinese transport infrastructure project in the Arctic.

Huang Nubo 黄奴般, poet, mountaineer, tycoon, has given up on buying land in Iceland for now. Plans to buy a plot in Norway are stalled as well, allegedly for political reasons.

Chinese media

Spurred by an article on Icelandic media (viz. Stundin) on China Radio International’s outlet targeting that country, I did some research on the state broadcaster’s ambitious network of ‘borrowed boats’, radio stations and news sites in several languages that help disseminate the views of the Chinese state while staying discreet about their status as part of the state media system. An July article of mine for the CPI blog focused on GBTimes, the arm of that network covering includes Northern Europe.

A Reuters report on CRI’s network came out in November. It had more of a US focus, but it did discuss GBTimes as well. I wrote an update a few days after that, including, as is my wont, some previously unpublished information e.g. on CRI’s affiliate in Mongolia.

A couple of weeks ago, CRI got a new partner, this time in Siberia. That partner also has an interesting background, in particular as a defence contractor.

Languages

All this reporting wouldn’t be possible without (often rather unrewarding) work on original-language sources, in English and Chinese of course, but also in Russian, Korean, Danish, Icelandic, Norwegian, Mongolian and a few others. Those specifically interested in the linguistic angle might like my recent guest post on the names of the Lena river on Language Log; more than my post, I recommend the comments, where you’ll find remarks by experts in Tungusic and Yukaghir.

state media: Iceland representative “highly praises” Xi Jinping’s speech at Internet conference

Iceland sent a representative to the world Internet conference in Wuzhen 乌镇 near Shanghai a few days ago, an event meant to advance the Chinese government’s views on ‘internet sovereignty‘. Xi Jinping’s opening speech, which included such phrases as “freedom is what order is meant for”, received what the People’s Daily calls “high praise” from foreign attendees including an Icelandic embassy official. Iceland was not the only country to send embassy staff to the event, but theirs is the only Western official I’ve seen quoted in state media reports on it.

The comments came from Ragnar Baldursson, minister-counsellor at the Icelandic embassy in Beijing. Ragnar is an old China hand who studied in China in the 1970s and has been working at the embassy for two decades.

Although spun by state media into something of an endorsement, Ragnar’s actual comments don’t specifically praise Chinese internet policy but simply highlight the increasing importance of the Chinese internet.

update on mining in Greenland

Chinese interest in mining in Greenland hasn’t received a lot of media attention this year, after General Nice (俊安) bought the Isua iron mine, which probably no one would think of developing at the moment (‘cucurbitae caput non habemus‘). That doesn’t mean Greenlandic officials have stopped promoting the island’s ores to Chinese potential investors (there have been meetings in October), or that Chinese interest no longer exists; quite the contrary. As two projects China Nonferrous is expected to help finance and build approach the production stage, Chinese investment in Greenland could become a reality pretty soon.

My latest piece for the China Policy Institute blog discusses these developments.

Chinese-Icelandic aurora observatory should start observing auroras next fall

The Chinese-Icelandic aurora observatory (CIAO), a joint Chinese-Icelandic project located at the Kárhóll farm in Reykjadalur, near Akureyri, is reportedly already under construction after local company SS Byggir won the contract for the main building. That, together with a recent visit to the area by the Chinese ambassador, augurs well for the project, that was already supposed to be ready more than a year ago.

Observation activities should begin in autumn 2016.

More on the observatory and the people and organisations behind it in my previous posts on the subject.