China and Russia have agreed to cooperate more deeply in developing Arctic shipping routes amid deteriorating conditions between both countries and the West. The two countries will jointly develop the Northern Sea Route – which spans 5,600km (3,500 miles) from the Barents Sea near Scandinavia, Chinese media have reported.
Last month, two Chinese heavy-lift vessels key to commissioning the second train arrived off the coast of the sanctioned Russian Arctic LNG 2 project after a five-week journey through challenging early winter sea ice, Gcaptain reported. he large-scale power generation modules were constructed over the past two years by China’s Wilson New Energies, an engineering, procurement, and construction company.
However, there is a high likelihood that the power infrastructure will remain idle for the foreseeable future as Russia's Novatek has halted operations at its Arctic LNG 2 project with no plans to restart it this winter. This represents a significant setback for the country's gas ambitions. Located in the Gydan Peninsula in the Arctic, the LNG project is considered key to Russia's efforts to boost its global LNG market share from 8% to 20% by 2030-2035.
Foreign shareholders have suspended participation in the Arctic LNG 2 project after the Biden administration imposed the new sanctions against the project in 2023, effectively withdrawing from the financing of the project and for offtake contracts for the new plant. The sanctions are part of the measures implemented by the U.S. and its Western allies that seek to limit Moscow’s financial ability to wage war in Ukraine.
Russia’s Crude Oil Shipments Slump
China has become the second largest buyer of Russian crude behind India after Europe started cutting back imports following Russia’s war in Ukraine. Earlier in the year, they completed the affirmation of the ‘comprehensive partnership’ and ‘strategic cooperation’ between the two sides, a reiteration of their mutual contempt for “closed-door military and political alliances” led by the West.
By Alex Kimani for Oilprice.com