China tightens grip on Kazakh gas

Chinese President Hu Jintao and his Kazakh counterpart, Nursultan Nazarbayev, were liberal with their profuse eulogies such as a “milestone in Sino-Kazakh relations” and “an epoch-making event” after their talks in Astana on December 12.

Hu had every reason to describe his official visit to Kazakhstan as a success. The two leaders signed three important documents relating to cooperation in the development of renewable energy resources, a joint memorandum on financing the second section of a gas pipeline from Kazakhstan to China and a credit agreement for the reconstruction of Atyrau oil refinery in West Kazakhstan.
Hu and Nazarbayev attended the launching ceremony of the first 1,304 kilometers section of the gas pipeline stretching from the

Kazakh-Uzbek border to Khorgos on the border with China through Zhambyl, in southern Kazakhstan and Almaty regions. It took the Kazakh-Chinese joint venture set up by state-controlled KazTransGaz and Trans-Asia Gas Pipeline Ltd, affiliated with the China National Petroleum Company (CNPC) 14 months to implement the $6.7 billion project, with an estimated capacity of 4.5 billion cubic meters (bcm) of gas to be delivered to China annually in its first phase. The volume of gas deliveries is planned to reach 40 bcm per year.

The opening of the gas pipeline from Central Asia to energy-hungry China, bypassing Russia, came as an unpleasant surprise to the Kremlin, which had pinned much hope on the reconstruction of an existing but dilapidated gas pipeline and laying an additional parallel pipeline. Preliminary agreements on this project were reached between Russia, Kazakhstan and Turkmenistan in 2007.

But the Chinese, effectively forestalling the Russians in muted competition for gas resources of Central Asia, dashed all hope of successfully carrying out the plan. Russia’s Gazprom and Lukoil still retain significant positions in Uzbekistan, but the successful launch of the new pipeline points to the weakening energy alliance between Russia, Turkmenistan and Kazakhstan. Once the construction of the second gas route to China from western Kazakhstan through Beineu, Bozoy, Shalkar and Samsonovka is completed in the coming spring, China will secure access to long-coveted Caspian oil and gas. The second 1,500 kilometers pipeline section to the Chinese border is expected to supply 10 bcm of gas annually.

Asia Times