Chi­nese-Cen­tral Asian En­ergy Nexus and the New Great Game

The Diplomatic Insight - - Contents -


China is one of the most pop­u­lated coun­tries, con­sum­ing about twenty per cent of the world’s en­ergy re­sources. Its hunger and thirst for en­ergy is in­creas­ing with the pas­sage of time. Along its coast China has built many fac­to­ries which are re­ferred as fac­tory-cities and has the largest auto-mar­ket in the world. China’s econ­omy is ex­pand­ing so it de­sires to oil that it needs to feed its in­dus­tries. Ac­cord­ing to the In­ter­na­tional En­ergy Agency (IEA), oil se­cu­rity has gained a vi­tal po­si­tion in the Chi­nese ex­ter­nal af­fairs strat­egy. Ac­cord­ing to US en­ergy in­for­ma­tion ad­min­is­tra­tion, by the year 2035 China’s en­ergy de­mands per cent. It has vastly ex­panded its in­dus­tries and to feed them China is cur­rently im­port­ing en­ergy re­sources from the Mid­dle East and the African re­gion. Th­ese re­gions are po­lit­i­cally un­sta­ble and would not be able to fuel the in­dus­tries of China for a longer pe­riod of time, so the most suit­able op­tion for China is to ex­plore the en­ergy re­sources is Cen­tral Asia. The Cen­tral Asian re­gion, full of en­ergy re­sources, con­tains al­most four per cent of global en­ergy de­posits. With enor­mous amount of nat­u­ral gas and oil de­posits, the re­gion has game. Rus­sia, United States and China are the im­por­tant play­ers in this game as all of them are look­ing to have a con­trol over the reser­voirs of the Cen­tral Asian re­gion. Cur­rently China is lead­ing this new great game since the 2014 when the US and NATO forces would with­draw from the Afghanistan. This ar­ti­cle would ba­si­cally try to dig in the en­ergy op­por­tu­ni­ties avail­able for China and that how would the Chi­nese En­ergy pol­icy in the re­gion, af­fect the new great game?

The Cen­tral Asian Re­gion

in­de­pen­dent coun­tries i.e. Kyr­gyzs­tan, Ta­jik­istan, Turk­menistan, Kaza­khstan and Uzbek­istan. Rus­sia is sit­u­ated in the North of the cen­tral Asian re­gion, Turkey is in the West, China in the East and Afghanistan and Iran are in the South. Af­ter be­com­ing sov­er­eign states in 1991, the CARs ini­ti­ated a friendly pol­icy to­wards the bor­der­ing coun­tries. Al­though this re­gion has enor­mous nat­u­ral re­sources but un­for­tu­nately, the Cen­tral Asian states are land­locked. The re­gion is home to about four per cent of global en­ergy de­posits. Con­se­quently this re­gion is an at­trac­tive des­ti­na­tion for the global su­per pow­ers as in to­day’s mod­ern age the con­trol over the en­ergy re­sources will de­ter­mine the fu­ture of the su­per pow­ers.

China and Cen­tral Asia

China is much cau­tious about its en­ergy needs and is de­vel­op­ing “en­ergy diplo­macy” with the re­gion. Trade ties be­tween China and Cen­tral Asia have in­creased over the pe­riod of time as in 2011 it was at $40 bil­lion. China is look­ing to make this re­gion a re­gional trade free zone to sneak into the re­gion’s huge en­ergy reser­voirs. In the near fu­ture the ex­pan­sion of the en­ergy projects be­tween China and Cen­tral Asia, will in­volve a Chi­naArab line to the oil ter­mi­nals of the Per­sian Gulf. Th­ese en­ergy paths and cor­ri­dors will make China an im­por­tant part of “Pan-Asian global en­ergy bridge” which will con­nect the en­ergy providers such as Iran, Rus­sia and Cen­tral Asia to en­ergy con­sumers. It will in­crease the Chi­nese role and

Kaza­khstan has huge reser­voirs of oil and it is very tempt­ing for the Chi­nese in­dus­tries. Kaza­khstan oil re­serves are 37 bil­lion bar­rels of oil and the nat­u­ral gas re­sources are at 8.6 tril­lion cu­bic me­ters. Chi­nese com­pa­nies are op­er­at­ing and in­vest­ing in Kaza­khstan. China National Pe­tro­leum Cor­po­ra­tion (CNPC) has the whole shares of the Kaza­khstan oil com­pany Ak­tobe­mu­naigaz and was re­named as CNPC- Ak­tobe­mu­naigaz. CNPC is try­ing to have a 49 per cent mi­nor­ity shares in Kaza­khstan’s AO Mangis­tan Mu­naigaz Com­pany from Kaz­mu­nai gaz. This agree­ment would give the Chi­nese govern­ment the power over al­most 15 per cent of Kaza­khstan to­tal oil pro­duc­tion. Kaza­khstan has for the Chi­nese oil com­pa­nies. The de­vel­op­ment of en­ergy re­la­tions will bring more op­por­tu­ni­ties for both the coun­tries. The co­op­er­a­tion ac­cord­ing to China will help in strength­en­ing and se­cur­ing its north-western bound­ary of the un­sta­ble Xin­jiang Uyghur in­de­pen­dent area. It will also help the China in her “go west” pol­icy. But the co­op­er­a­tion be de­pend­ing on the dig­ging and search­ing of new oil and nat­u­ral gas de­posits present in the shelf ar­eas of

the Caspian Sea. This might help in invit­ing more Chi­nese oil and nat­u­ral gas ex­plo­ration com­pa­nies in the re­gion and might re­in­force Chi­nese com­pa­nies’ pres­ence in the re­gion at the cost of Euro­pean, Amer­i­can and Rus­sian com­pa­nies.

One of the huge nat­u­ral gas ex­porters to var­i­ous re­gions of the world is Turk­menistan. Ac­cord­ing to the oil and gas journa,l Turk­menistan has proven nat­u­ral gas re­serves of 265 TCF. The Turk­menistan-China gas pipe­line came into ex­is­tence due to China’s thirst for en­ergy. In 2009, the then pres­i­dent of Turk­menistan Gur­ban­guly said that Turk­menistan would raise its gas ex­ports to a vol­ume of 65 bcm a year. This gas pipe­line is con­sid­ered to be China’s chief ex­porter of nat­u­ral gas via the pipe­line that goes through Uzbek­istan and Kaza­khstan. By im­prov­ing its en­ergy nexus with Turk­menistan, the Chi­nese the geopol­i­tics of the re­gion. Bei­jing has a huge ad­van­tage as it is and will be a huge im­porter of oil en­ergy from Turk­menistan and will not have to look to­wards the po­lit­i­cally in­sta­ble re­gions. The IEA re­ports that by 2020, China’s pro­duc­tion will be 120-140 bcm while its con­sump­tion would be 180 to 200 bcm. China would be buy­ing more from Turk­menistan due to this sup­ply and de­mand gap. Chi­nas re­la­tions with Uzbek­istan have im­proved over the years. The oil and gas jour­nal re­ports that Uzbek­istan sits on 65 tcf re­serves of nat­u­ral gas, mak­ing it 4th largest in the Eura­sia re­gion and 19th in the world. China has also sneaked into the re­sources of Uzbek­istan. It has setup 65 large com­pa­nies in­clud­ing GTIC, CNPC, and China ma­chin­ery. Two com­pa­nies are the main co­op­er­a­tors namely CNPC and Uzbekneftegaz as in 2004 they inked a treaty on en­ergy col­lab­o­ra­tion. Two more con­tracts were signed in 2006 to ex­plore and ex­pand po­ten­tial pe­tro­leum de­posits Sea to­gether with Rus­sia’s Lukoil, Malaysia’s PETRONAS, and South Korean National oil co­op­er­a­tion. One more joint ven­ture was to ex­plore oil be­tween Uzbekneftegaz and The cross­roads of Uzbek-Chi­nese gas pipe­line has added mo­men­tum to the en­ergy co­op­er­a­tion. Uzbek­istan is gain­ing, as they are at­tract­ing the Chi­nese in­vest­ment to its en­ergy sec­tor with spillovers to other sec­tors of its econ­omy. Chi­nese in­vest­ment has ex­ceeded $4 bil­lion mak­ing her the largest in­vestor in Uzbek­istan, third prime trad­ing col­lab­o­ra­tor, and main pur­chaser of cot­ton and prin­ci­pal sup­plier of tele­com ap­pa­ra­tus. The bulge in the econ­omy of China and in­crease in the in­dus­trial growth has com­pelled it to think about its en­ergy needs. The do­mes­tic pro­duc­tion of oil and nat­u­ral gas are not enough to de­pend­ing on po­lit­i­cal in­sta­ble Mid­dle East for its en­ergy needs but now china to­wards Cen­tral Asia to ex­plore the en­ergy needs. The ad­van­tage is that the Cen­tral Asian re­sources will be avail­able to China for a longer pe­riod of time. All the ma­jor pow­ers are look­ing to­wards Cen­tral Asian states to fuel their in­dus­tries but China is in a bet­ter po­si­tion.

Re­play­ing the Great Game

The Cen­tral Asian re­publics share a same strate­gic en­vi­ron­ment. Mul­ti­lat­er­al­ism is the prin­ci­pal fac­tor of their for­eign pol­icy. China has risen to one of the world’s largest econ­omy

and has brought the Cen­tral Asian His­tor­i­cally over the years China had great re­la­tions with Cen­tral Asian states but dur­ing the last cen­tury CARs might be wit­ness­ing a re­play of great game, with China and US as the new ac­tors. CNPC is state owned oil gi­ant and has pen­e­trated fully in to the Cen­tral Asia re­gion, mak­ing China a top player. The exit of US and NATO forces from Afghanistan in 2014 will it would open up more geo-strate­gic gates for it. In the long run China sees Cen­tral Asia as a gate­way of trade with gulf and Europe. The re­gional en­ergy nexus of China and Cen­tral Asia makes the nexus of a new great game that will be there and con­tinue for a long pe­riod of time. Dur­ing the 19th Cen­tury, the Great Game was a po­lit­i­cal ri­valry be­tween the em­pires of Bri­tish and Rus­sia. The “New Great Game” is a fresh phrase used to ex­plain the con­tem­po­rary geopol­i­tics. It also points to­wards neo-colo­nial­ism and the geopol­i­tics of pipe­lines. With the emer­gence of the new states in the Cen­tral Asian re­gion in 1991, the su­per pow­ers has­tened to­wards this re­gion. At that time, the newly lib­er­ated na­tions were not in a po­si­tion to es­tab­lish their pre­cise for­eign re­la­tions and poli­cies but, as the time passed they learned the art, and the at­ti­tude of the great pow­ers. The pro­duc­tion of Oil and Gas is the back­bone of CARs econ­omy, thrown to sev­eral con­straints, they de­pend on their bor­der­ing coun­tries to pump Oil and Gas out of the re­gion. Since the con­tem­po­rary geopol­i­tics in the Cen­tral Asian re­gion is very dense to get hold of, so it is very tricky to de­ter­mine which coun­try is the leader of this new great game in Cen­tral Asia. How­ever it has been no­ticed that be­cause of this geopo­lit­i­cal game, CARs have been in pain as they they ex­pected to have. Even af­ter 20 years, oil sup­ply out of the re­gion is not very no­tice­able. There is a race be­tween two forces for pulling Cen­tral lead­ing role from the western side in the Cen­tral Asian re­gion be­ing played by the US and from the Eastern side China and Rus­sia are the main play­ers. And then there is a con­test within a con­test as Rus­sia and China are try­ing U.S have made huge in­vest­ments in the Cen­tral Asian re­gion to in­crease their su­per pow­ers have made in­vest­ments in the re­gion to es­tab­lish the pipe­lines that would work un­der their power and wish. Since it is a con­test be­tween the re­gional and ex­tra-re­gional pow­ers th­ese play­ers are sur­round­ing the nat­u­ral re­sources of the Cen­tral Asia. Cen­tral Asia has a huge dis­ad­van­tage of it be­ing a land­locked re­gion. The Cen­tral Asian re­publics don’t have the in­fra­struc­ture like the roads, pipe­line play­ers in the re­gion are col­lect­ing nat­u­ral wealth like oil, gas and valu­able min­er­als to im­prove the econ­omy of their coun­tries. The re­gional and big pow­ers had de­vel­oped their pol­i­tics on the pipe­line net­works. The goal of the great pow­ers is to cre­ate a course through the Cen­tral Asian their national in­ter­ests. Strate­gi­cally the Cau­ca­sus has been a main re­gion West and U.S. for the ship­ping of en­ergy wealth. The game of pipe­line this re­gion. The Rus­sian govern­ment con­trolled pipe­lines are cross­ing through this im­por­tant area, al­though, Wash­ing­ton is try­ing to de­te­ri­o­rate and desta­bi­lize this net­work of pipe­lines. The U.S has de­vel­oped a pipe­line to the Mediter­ranean, set­ting-up a new bloc with Azer­bai­jan, Ge­or­gia and Turkey.


Look­ing at the com­plete pic­ture, the be­hav­ior and poli­cies of CARs are sus­tain the sym­me­try in the re­la­tions be­tween re­gional and ex­tra-re­gional pow­ers. Apart from the diplo­matic deal­ings, Cen­tral Asian states have paid at­ten­tion to­wards their goals which are head­ing them to es­tab­lish close eco­nomic and po­lit­i­cal re­la­tions with the Western pow­ers. The Cen­tral Asian coun­tries should es­tab­lish their pre­cise for­eign pol­icy with un­der­stand­ing of the cur­rent game so the new great game. This new great game is very es­sen­tial to de­ter­mine not only the fu­ture of the in­ter­na­tional pol­i­tics but also of the cen­tral Asian re­gion. China did not have that much now. The Chi­nese role and in­vest­ment in this re­gion would now in­crease as their de­mand for the en­ergy has in­creased with the pas­sage of time and on the con­trary, the role of US in the re­gion would be de­creased since they are leav­ing Afghanistan in 2014. The CARs should now re­al­ize their im­por­tance and should play this game very se­ri­ously, tak­ing the max­i­mum out of the su­per pow­ers and cash­ing their nat­u­ral re­sources. *The writer is work­ing for In­sti­tute of Strate­gic Stud­ies, Is­lam­abad.

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