Geopolitics is heating up in the Arctic, and I’m not talking about what happened last year when the Canadian army deployed its elite JTF 2 special operations force to the Yukon to look for that rogue balloon.
According to an unreliable Yukonomist source encountered in the 98 Hotel tavern, the presence of JTF 2 was inadvertently revealed when Dawson City’s singles scene lit up as the newly arrived secret commandos activated their Tinder apps.
My source declined to describe what happened after that.
No, the real heat is on the other side of the Arctic. Russia is engaged in a high-stakes push to export Siberian liquefied natural gas (LNG) to fund its war economy. It is running into determined American and European resistance. China, meanwhile, is both a potential LNG customer and supplier of finance, technology and critical components to Russian producers.
The plotline has the ingredients for a ripping spy novel: Arctic icebreakers, Russian LNG, US sanctions and Chinese freighters being renamed and repainted offshore.
Russia is backing several projects to get Siberian gas to market, including one called LNG 2. This is located in gas-rich Yamal on Russia’s Arctic coast, a place Yukoners will recall from the Arctic Winter Games before Russia was sanctioned for its latest invasion of Ukraine in 2022.
LNG 2 is a massive project, with over US $20 billion in investment in pipelines, natural-gas liquefaction plants and custom-designed ice-breaking LNG tankers longer than four hockey rinks.
According to the Oxford Institute for Energy Studies, U.S. and European sanctions have set the project back. Western liquefaction technology was critical to the plants in Yamal, and the ice-tankers were designed in Korea. The Korean shipbuilders even completed the first six of twenty-one planned tankers, but these are now sanctioned and sitting idle.
The Russians are now building their own tankers, but progress has been held up by sanctions blocking access to highly specialized Western expertise. For example, the world only has one supplier of marine membrane containment systems for LNG tankers. This company can no longer do business in Russia.
It is a similar story with the massive power generation modules containing the gas turbines needed for Yamal’s liquefaction plant. These modules are mammoth condo-building-sized pieces of complex industrial machinery. The Russian workaround is to use less sophisticated Chinese technology, and to get the modules built in China.
Which gets us to the latest skullduggery.
According to the High North News, an independent newspaper published at northern Norway’s Nord university in Bodø, the Russians launched an “elaborate scheme to transport a Chinese power plant to Russia’s Arctic undetected.”
After sanctions hit the Yamal project, in December 2022 the Russians contracted with a Chinese engineering firm to build four modules and a substation.
By 2024, the equipment was ready to ship to Yamal. In March, a Chinese heavy-lift vessel -- think of a huge floating version of a flatbed trailer -- named the Wei Xiao Tian Shi left China headed the long way around India and Europe to Murmansk in Russia.
However, after fresh US sanctions on other Chinese construction companies and heavy-lift vessels, ship tracking websites such as Shipatlas began showing the Wei Xiao Tian Shi circling in the North Atlantic off the Azores. It eventually turned back and did not arrive in Russia.
The Chinese contractor announced in June it would no longer do work for Russia, a seeming victory for U.S. sanctions. However, later in the summer, heavy lift vessels began arriving at the plant and loading the modules.
The High North News says the “operation includes using a half dozen vessels, unloading and reloading the modules in various Chinese ports to obscure their origin, and renaming as well as repainting vessels mid-voyage to confuse anyone who may be watching.”
High North News says a heavy-lift vessel named the Ya Qing Hai Yang arrived at the plant around mid-August. After manoeuvring the massive module onto the deck, it set off. But not for Yamal. Instead it went to another Chinese port where it unloaded the module on September 6.
Then the same ship -- but now with a new paint job and re-named the Ocean 28 -- returned and reloaded the module on September 23. High North News somehow obtained a photo that seems to show the ship with its new name, still with wet paint over its old one. The newly renamed Ocean 28 set “Norway” as its public destination and began its journey.
Then more heavy-lift vessels showed up and began loading modules.
In the old days, only major navies would have known where the ships went. But today, ships carry transponders, register their planned routes and are visible to cheap consumer-grade satellite imagery. High North News says that, a few days after they published their exposé, three of the ships began showing their Russian Northern Sea Route permits. Two of them updated their online destination to show LNG 2.
On Oct. 27, as this column was written, Ocean 28 and one of the vessels appear to be in a holding pattern off the Siberian coast about 300 kilometres from LNG 2. Another is still en route in the East Siberian Sea.
A moment of Arctic drama may roll out next week. Will the ships deliver their strategic cargoes to Russia? Or will they turn back to warmer waters and, if they do, will they get there before freeze up?
Meanwhile, Russia is already exporting LNG from other plants completed before the sanctions. The next phase of the battle involves going after the traders, bankers, shipowners and logistics firms that help Russia move its cargoes to customers in Asia. The Oxford report says that satellite-watchers have already observed Russian LNG tankers meeting other tankers for surreptitious mid-ocean transfers, enabling the Russian LNG to be laundered as sanctions-free in a nearby port.
The Yukon is a bystander in all this, and Canada’s plans to upgrade its decayed surveillance capabilities in the North are years away.
But the ripples of geopolitics will reach our region through the LNG market. The importance of LNG exports to the Russian war machine means that Canada’s allies are looking for new sources of LNG to displace Russian product from global markets. There is abundant cheap gas in the Alaska Highway corridor in Northeastern BC, and it will start hitting global markets in 2025 as Canada’s first major LNG plant opens in Kitimat. Additional projects from the Haisla First Nation, Alaska and others in our region are on the table.
The shadowy voyages of LNG 2’s modules will not be the last chapter in this new Arctic geopolitical thriller.
Keith Halliday is a Yukon economist and the winner of the 2022 Canadian Community Newspaper Award for Outstanding Columnist. His most recent book Moonshadows, a Yukon-noir thriller, is available in Yukon bookstores.
