Great energy game

PUBLISHED : Wednesday, 23 December, 2009, 12:00am
UPDATED : Wednesday, 23 December, 2009, 12:00am

Years of building friendship with the countries of Central Asia have paid off for China with the opening of a 1,833-kilometre pipeline last week that will bring natural gas from Turkmenistan through Uzbekistan and Kazakhstan to Xinjiang , where it will be piped to major cities in the east and south, possibly including Hong Kong.

Currently, China produces almost all the gas that it consumes. However, when it reaches full capacity, the pipeline will be capable of delivering 40 billion cubic metres of gas a year, more than half the amount that the country consumed last year.

At present, gas accounts for only about 3 per cent of mainland China's energy mix, with coal being predominant. But it wants gas to make up a larger component of that, because it is cleaner.

Beijing is scouring the world for oil and gas to fuel its economy and has successfully developed energy sources in far-flung corners of the world, including Africa and Latin America, in addition to the Middle East. The Central Asia pipeline is a major feather in its cap.

The Chinese have gone about their mission quietly, building up relations with countries through sure-footed personal diplomacy. President Hu Jintao or Premier Wen Jiabao travel to Central Asia virtually every year. Central Asian leaders, too, are frequent visitors to Beijing. The president of Kazakhstan, Nursultan Nazarbayev, has paid 16 visits to China since the two countries established diplomatic ties in 1992.

China has nurtured its relationship with Central Asia since well before the setting up of the Shanghai Co-operation Organisation - a grouping that includes Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan, in addition to China and Russia - in 2001.

Beijing makes a point of focusing on economic co-operation. But, by cementing economic relations, it also achieves political goals. Thus, when violence erupted between Han Chinese and Uygurs in July, all the members of the Shanghai Co-operation Organisation supported Beijing's position that events in Xinjiang were domestic affairs and endorsed efforts by Beijing to 'restore order'. The pipeline deal positions China as a major player in Central Asia, which hitherto was dominated by Moscow. Now that the pipeline is in place, Turkmenistan does not need to be dependent on Russia, which used to be the only customer for its natural gas.

In fact, the Turkmenistan deal is but one of many Central Asian projects in which China is involved. It has also offered a US$15 billion loan to Kazakhstan, part of which would be used to acquire a 50 per cent interest in the country's largest oil-producing company. Economic deals with China provide Central Asian countries with an alternative to reliance on Russia or, at the least, strengthen their hand when dealing with Moscow. 'This pipeline will have a positive impact across the entire region and beyond,' said Turkmen President Gurbanguly Berdymukhammedov. 'It will become a major contributing factor to security in Asia.'

This is the first major gas export route from Central Asia that does not go through Russia. It was built in just over two years, whereas the Russians have been talking about building a gas pipeline to China for five years. While China is interested in diversifying its sources of energy, Central Asian countries are interested in new markets. Projects like the Turkmenistan pipeline, therefore, serve their mutual interests. If Russia is unhappy with the latest turn of events, it is playing the role of graceful loser, with Prime Minister Vladimir Putin saying that Russian plans for pipelines to China would not be affected.

The United States, meanwhile, is showing unwonted interest in Central Asia. George Krol, deputy assistant secretary of state for South and Central Asia, announced a programme of annual consultations with each Central Asian country, beginning with a visit by Uzbekistan's foreign minister to Washington this month. Central Asia, Krol said, 'is at the fulcrum of key US security, economic and political interests'. The 'Great Game' may not be afoot in the 19th century sense, but there is certainly a battle for influence in Central Asia and for access to its energy resources.

Frank Ching is a Hong Kong-based writer and commentator