China Expands Energy Ties in Central Asia

China has been implementing deeper and deeper energy cooperation with Central Asia, for over a decade, beginning with Beijing's acquisition of energy infrastructure in western Kazakhstan not far from the Caspian Sea, which they operated for years at a loss in order to have and maintain a foothold there.

The strategy first bore fruit with the 1998 signature on the Kazakhstan-China oil pipeline. The pipeline is now operating despite the fact that four years were required before construction began on its first phase, due to Kazakhstani discomfort over the prospect that Chinese workers sent to build it might not go home after the job was done.

The pipeline has been extended gradually westward across Kazakhstan and will probably reach Chinese-owned infrastructure in the west of the country during the present decade.

Since then, natural gas has taken the forefront as Chinese energy cooperation has expanded to Turkmenistan and, possibly to come in the future, also Uzbekistan. Earlier this month, the head of China's National Energy Administration Liu Tienan visited Kazakhstan, Turkmenistan, and Uzbekistan, the three main energy-producing countries in Central Asia.

His visit to Turkmenistan was timed for him to lead the Chinese delegation to the first meeting of the bilateral intergovernmental subcommission on energy cooperation, celebrating among other things the export of over 14 billion cubic meters (bcm) since the December 2009 opening of the first phase of the Turkmenistan-China natural gas pipeline, transiting also Uzbekistan and Kazakhstan.

Although the official statements revealed rather little other than the need to institutionalize and routinize bilateral relations in the energy sector, the press in Ashgabat has hinted that the Chinese are not as concerned with training Turkmenistan's workers in the sector as president Gurbanguly Berdimuhamedow would wish.

Liu's trip to Uzbekistan was soon followed by another Beijing delegation led by Wu Banguo, who heads his country's legislature, the Chinese National People's Congress. Wu used the occasion to call for enhancing the two countries' cooperation within multilateral forums, including unspecific multilateral parliamentary organizations and the Shanghai Cooperation Organization, and signed agreements with the president of Uzbekistan's senate, Ilgizar Sabirov, on the implementation of a number of trade and economic cooperation agreements and also interparliamentary cooperation. Details were not given in the official statements.

Wu's reception in Tashkent follows Karimov's April trip to Beijing, where previous agreements were signed at the head-of-state level, probably the ones on which the legislative parties signed follow-up implementation accords. The April deals were worth US$5 billion for investment projects were signed, notably in the natural gas and petrochemical industry but also for technology transfer from China in general machine-building sectors as well. Wu did not visit Turkmenistan, but he did follow with a stop in Kazakhstan. He had previously travelled to Russia and Belarus in the course of his four-country tour.

The Turkmenistan-China natural gas pipeline passes through Uzbekistan, which is also an important gas producer but has in the past exported relatively little because of domestic requirements of its large population. Some reports during Wu's visit suggested that Uzbekistan and China were in talks over the export of gas produced in Uzbekistan as early as 2012, with an agreement possible as soon as December.

It is difficult to say whether these will be mere memoranda of understanding or instead detailed plans for implementation of bilateral investment agreements already in the docket. Probably they will set the framework for talks between the countries' respective industrial concerns over project design and implementation. Tashkent export market is dominated by Gazprom, and it needs other outlets.

As reported by Xinhua, upon his return to Beijing, Liu especially underlined his government's plans to accelerate the construction of pipelines in Kazakhstan. He pointed in particular to the Beineu-Shymkent section of the China-Kazakhstan gas pipeline and the Kazakhstani section of the Turkmenistan-China gas pipeline. As was raised here as a possibility three years ago (Gas pipeline gigantism, Asia Times Online, July 17, 2008), this second stage of the Kazakhstan-China gas pipeline will also feed South Kazakhstan province.

Wu attended the ceremony held in the Kazakhstani city of Turkistan, where the symbolic first weld was executed to mark the start of Phase Two of the Kazakhstan-China gas pipeline. Also attending were the head of KazMunaiGaz, the national monopoly, Kairgeldy Kabyldin and Kazakhstan's minister of energy and mineral resources Sauat Mynbaev, as well as local political figures and representatives of CNPC and PetroChina.

This pipeline runs 1,475 kilometers entirely inside Kazakhstan from Beineu in the western province of Mangistau to Shymkent in South Kazakhstan province, where it will join up with the gas pipeline from Turkmenistan that already runs through Uzbekistan and Kazakhstan to Xinjiang province in western China, whence it is transited to the energy-hungry coast via the internal Chinese West-East Pipeline.

The Beineu-Shymkent pipeline has a design capacity of 10 bcm per year (bcm/y), and can later be increased to 15 bcm/y. For the first time, it frees South Kazakhstan province, which has one of the highest population growth rates in the country, from dependence upon foreign gas imports (mainly from Uzbekistan). As its volume is increased, some of the gas produced in Beineu will also transit to China, through the second phase of the Turkmenistan-China pipeline, on which construction has now begun.

Dr Robert M Cutler, educated at the Massachusetts Institute of Technology and The University of Michigan, has researched and taught at universities in the United States, Canada, France, Switzerland, and Russia. Now senior research fellow in the Institute of European, Russian and Eurasian Studies, Carleton University, Canada, he also consults privately in a variety of fields.