Economy 02-11-2018

China is set in Greenland and the US is disturbed

The China National Petroleum Corporation, the largest oil company of the Asian giant, and the China National Offshore Oil Corporation, the third largest oil company in the country, are interested in obtaining the necessary licenses to exploit the oilfields of Greenland, according to Danish. Radio.

The representatives of both companies have met with Greenland's Energy Minister, Aqqalu Jerimiassen, and have requested that more meetings be held to address the prospects of drilling, from 2021, the coastal deposits of Nuussuaq, northwest of the island.

This is the first time that China shows an interest in extracting oil from the world's largest island, famous for its arid climate and its small population of some 55,000 inhabitants. A business that the authorities of Greenland have described as "positive".

Greenland has supported and promoted for years the idea of expanding the raw materials sector. Many are those who say that, if they do, there would be a stable income that, over time, could unseat Copenhagen's annual subsidy to the island of 3,500 million Danish crowns - some 660 million dollars - and guarantee a greater independence of the Crown of Denmark, of which the island is a part.

The search for new sources of additional income has intensified because Greenland is facing an increasing gap between income and the cost of welfare. A fact that joins the aging of its population.

The geological studies that have been carried out on the island estimate that the depths of Greenland are home to oil and gas equivalent to 50,000 million barrels. Greenland's attempts to extract oil in its North Sea began in 1972 and, since then, 3,800 million barrels have been extracted, which has caused the island to enter 415,000 million Danish crowns - some 57,000 million dollars.

Attempts by foreign companies to seize Greenlandic oil have failed. The Scottish Cairn Energy, one of Europe's leading independent exploration and distribution companies for oil and gas, was not able to do things right at the time and had to withdraw from Greenland. With oil prices falling more than $ 100 per barrel in 2008 and between $ 40 and $ 50 in 2016, all other companies with exploration rights for Greenlandic deposits returned their licenses. Because oil drilling in the Arctic is not only costly, it is also fraught with risks due to extreme weather.

The panorama contrasts with the recent interest of China in the island. Their companies plan to extract rare metals such as uranium to the south and zinc to the north of the territory. These plans coincide with those of the country itself to establish a research base there and with the installation of a university ground station in cooperation with the Greenland Natural Institute. In return, the autonomous region would open an office in Beijing.

China's interest in the Arctic - and that includes Greenland - has alarmed both the US and Denmark itself. In its latest risk assessment, the Danish Defense Intelligence Service warns of the risks associated with Chinese investments in Greenland "as a result of the close links between Chinese companies and Chinese leaders". It also warns of the great impact that this would entail in the small population of Greenland.

In 2016, Denmark stopped China's plans to buy a defense facility that was not being used. In September 2018, the Greenland authorities gave in to pressure from Copenhagen and prevented a Chinese company from signing a contract to modernize their airports. The United States, which has maintained several bases in Greenland for decades, supports the idea of keeping Chinese companies away from the island.


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