China moves into the Arctic

China, Iceland announce deal on oil-rich Arctic

China and Iceland announced a deal on the oil-rich Arctic region Friday after Chinese Premier Wen Jiabao flew in to Reykjavik on the first stage of a four-nation European tour.

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21 April, 2012

The deal was part of a package of six agreements signed on the first day of the Chinese premier's visit to the country, during which he held talks with his Icelandic counterpart Johanna Sigurdardottir.

The Arctic's oil reserves were high on the agenda for energy-hungry China during the high-powered delegation's visit to Iceland -- though Sigurdardottir touted the Arctic deal as a research collaboration.

"These agreements will provide various opportunities for increased cooperation on research between Icelandic and Chinese scientists in this area," her office said on its website.

Iceland's strategic location near the Arctic has not gone unnoticed in China, the world's biggest energy consumer: the shrinking of the polar ice cap is making the region's mineral resources more accessible.

The retreat of the ice has also opened up the potential for a shorter cargo shipping route with Asia, which would cut the sea voyage between Shanghai and northern Europe by some 6,400 kilometres (4,000 miles).

China's interest in Iceland came to the fore last year when a Chinese property tycoon tried to buy a large swathe of land in the north of the country for a tourism project.

Some observers suggested property magnate Huang Nubo's purchase would help China win a foothold in the Arctic, amid general concern over Chinese investment in Europe.

That deal was eventually blocked by the Icelandic government, after officials there said China had mooted using the island as a trans-Arctic shipping port.

Wen's visit is the first to Iceland by a Chinese premier. Sigurdardottir used the occasion to give Beijing a diplomatic nudge over human rights concerns.

Sigurdardottir had "also discussed human rights issues, civil rights and international commitments," her office said.

"The prime minister and premier agreed to enhance relations and cooperation on gender equality in the near future."

Besides the Arctic cooperation agreement, the two sides signed five other accords with 11 ministers and deputy ministers accompanying the Chinese leader.

They included agreements on geothermal sciences; marine and polar sciences; geothermal research; and a solar project in Iceland.

Iceland's Orka Energy signed a deal with China Petrochemical Corporation of the Sinopec Group on using geothermal energy in China for heating homes and generating electricity.

As part of its ambitions in the polar region, Beijing is seeking permanent observer status on the Arctic Council, an intergovernmental forum promoting cooperation among eight states bordering the region.

Those nations include Iceland and Sweden, which Wen is also visiting during his eight-day tour of Europe.

The Chinese delegation will also travel to Poland and Germany, where they are expected to discuss the ongoing eurozone crisis.

Wen is due to meet with German Chancellor Angela Merkel and attend a China-Germany business summit where both will deliver speeches, Beijing said.