China's efforts to tap the natural resources and transportation routes of the arctic will continue to be frustrated by Norway, a diplomatic source says.

The Norwegian newspaper Aftenposten last week cited an unnamed source saying Norway will block China's bid to obtain permanent observer status at the eight-member Arctic Council as long as Beijing continues to snub Oslo diplomatically.

China downgraded its relationship with Norway after the Nobel Peace Prize was awarded to Chinese activist Liu Xiaobo in 2010. Even though the Nobel committee is independent from the Norwegian government, Beijing has cut political and human rights ties with Oslo.

Aftenposten's source said the situation has made it hard for the country to back Denmark's moves to sponsor China into the Arctic Council's permanent observer table, which include such non-arctic nations as France, Germany, Britain, Poland and Spain.

Full members include Denmark, Canada, Finland, the United States, Russia, Sweden, Norway and Iceland.

The council's activities have centered on such issues as environmental protection, shipping activity and the effects of climate change. But with melting of permanent sea ice, the arctic is emerging as not only a viable summer shipping route from Asia to Europe but also as a potentially rich sources of valuable minerals.

China has long sought access to Greenland to share in its wealth of rare earths and minerals such as zinc, iron ore, uranium, lead and gemstones, which are being exposed as its glaciers retreat and its Danish administrators seek to commercialize the resources.

The arctic is also thought to hold up to 25 percent of the world's oil and natural gas reserves.

Denmark, seeking to bolster trade with China, is backing Beijing's bid to upgrade its status from ad hoc to permanent observer.

The Danish ambassador to China said in October the Chinese have "natural and legitimate economic and scientific interests in the arctic" and that Denmark intended to support China's application to become a permanent observer to the Arctic Council.

Norway's position, however, effectively "amounts to a ban" of China at the group, Senior Scientist Geir Flikke of the Norwegian Institute of International Affairs told the newspaper, adding, "In that sense, it is remarkable."

The diplomatic row has reversed Oslo's position -- Foreign Minister Jonas Gahr Store said two months before Liu Xiaobo was awarded the Nobel Peace Prize that Norway supported China's bid for permanent observer status.

"I can neither confirm nor deny this story but I can say bilateral contacts between Norway and China are at a low level," Karsten Klepsvik of the Norwegian Ministry of Foreign Affairs told the British newspaper The Guardian.

The stakes in arctic are indeed high for Beijing, said Ji Zhiye, deputy director of Chinese Institute of Modern International Relations.

"Different states now are studying options to ship their cargoes via Arctic Ocean," Ji told the Voice of Russia. "The reason is obvious. When you sail from Europe, right after you pass Egypt through Suez channel and Red Sea you encounter Somali pirates or the pirates operating in the Strait of Molucca.

"When the shipments go via Arctic Ocean, then one has an opportunity to save huge amounts of money, which otherwise would be spent on security operations, and the risks are much lower."