CC BY
93
THE CHINA'S ENERGY POLICY IN CENTRAL ASIA
A. Nogayeva, N. Yessen Eurasian National University
nogayeva_am@enu. kz
China is taking steps to ensure energy security in meeting its energy demands. These involve investments made in projects of exploration and operation of oil deposits abroad, implementation of negotiations concerning the necessity of international oil and natural gas pipelines, formation of strategic oil reserves, construction of refineries to process oil that comes from the Middle East, development of natural gas industry, and gradual opening of off-shore areas to foreign companies for research and development. China is taking these steps due to its concerns about dependence on imported energy because this dependence on imported energy resources may be used by forces that want to influence or pressure China.
Keywords: Chirn, Central Asia, ежrgy policy, resources, pipelines
Китай предпринимает шаги для обеспечения энергетической безопасности в удовлетворении своих энергетических потребностей. Они включают инвестиции в проекты разведки и эксплуатации нефтяных месторождений за рубежом, проведение переговоров о необходимости международных нефтегазопроводов, формирование стратегических запасов нефти, строительство нефтеперерабатывающих заводов по переработке нефти, поступающей с Ближнего Востока, развитие газовой промышленности и постепенного открытия оффшорных зон для иностранных компаний для исследований и разработок. Китай предпринимает эти шаги из-за своей озабоченности по поводу зависимости от импортируемой энергии, поскольку эта зависимость от импортируемых энергоресурсов может использоваться силами, которые хотят влиять или оказывать давление на Китай.
Ключевые слова: Китай, Центральная Азия, энергетическая политика, ресурсы, трубопроводы
According to many Chinese people, the USA poses a threat as it is disturbed by China's rise and therefore China must reduce its dependence on the USA to a minimum. In a world where the USA is the sole superpower, China enjoys the most sensitive position in the face of American power. If the relations between the two countries deteriorate, the USA, which controls oil imports from the Gulf of Basra to the South Chinese Sea, may use its superior military power to prevent China's oil supplies (Marketos 2008).
China's policy in the field of energy is aimed at product control from probe to terminal or ensuring long-term supply through buying stocks of producing company. For example, because China does not trust the markets, China is making investments in stocks and long-term supply contracts unlike western oil strategies to provide protection from supply and price shocks. Some writers even suggest that the fundamental view of the government is that oil security requires possessing both the resources in the soil and transportation lines (Laruelle and Peyrouse 2009: 44). To this end, China is investing substantial amounts of capital to supervise oil and gas transportation and buy pipelines in Central Asia, the Gulf of Basra, and Russia (Blank 2005:102). The reason for this, if we remember the means of China that we discussed above is that China cannot set up an ocean flotilla in the short term to protect the oil coming from the Middle East (Pan 1997).
The fundamental quality of Chinese oil companies operating abroad is that they act very pragmatically. Firstly, Chinese companies buy stocks of deposits with proven reserves or those that are being extracted in order to reduce exploration costs to a minimum. Secondly, in companies with foreign partners, the Chinese side attempts to obtain the controlling stake or buy out the joint company altogether when it is possible. These actions of Chinese companies indicate that they are directly related to China's energy security (Delovaya Pressa 2003). When reliable control cannot be ensured, a solution is sought in diversification of global energy resources. To this end, China sells weapons and even missile technologies to countries from which it imports energy (i.e Iran, Iraq, Sudan, Saudi Arabia). The military cooperation of China with Central Asian countries-within the framework of SCO should also be evaluated in this context (Blank 2005: 101-102).
Within this framework, it is seen that Central Asian energy resources, along with the Russian energy resources, are the most convenient for China. However, factors such as China's failure to successfully negotiate with Russia regarding the construction of a pipeline from Eastern Siberia to Northeastern China have led China to seek joint energy projects with several Central Asian countries (Wishnick 2009: 33). In other words, Central Asia holds significance for China in terms of reaching energy resources and diversification of transportation routes because this region is safer than the maritime routes controlled by the USA. It is highly likely that the countries of the region will engage in energy cooperation with China rather than the USA due to its geographical position. With an agreement was signed with Kazakhstan in 1997, China announced that it would make an investment of 11 billion dollars in the projects in the energy sector.(Kaukenov 2009) Having begun active operations in Central Asian countries, Chinese companies now extract 20 million tons of oil in Kazakhstan, where the highest number of companies operates. China's National Petrol Company (CNPC) became the second biggest company in Kazakhstan in terms of oil extraction at the end of 2007 (Marketos 2008 ).
At the same time, China's energy demand in the region and the steps that it has taken in this regard have reached dimensions that disturb countries of the region besides Russia and the USA. Having bought a large portion of the "AktobeMunayGas" company in Western Kazakhstan in 1997, China's largest oil company China National Petroleum Corporation- (CNPC) became the sole owner of the company in May 2003 by buying the reamining shares for 150.2 million dollars. CNPC seized control of 50 % of the Northern Buzachi deposits on the Caspian coast in the same year1. In 1998, CNPC bought ChevronTexaco's shares in Kazahkstan, but began active operations in 2002 and extracted 327.6 tons of oil. CNPC is planning to raise this figure to 1 million ton and transport the oil via the Western Kazakhstan-Western China pipeline (Delovaya Pressa 2003). Therefore, Chinese companies are investing in regions around these pipeline routes (Northern Buzachi, Northern Kumkol and Karajanbas) (Laruelle and Peyrouse 2009: 44). Moreover, 49% of Kenkiyak-Atirau pipeline, which constitutes part of this pipeline, belongs to the Chinese side (Delovaya Pressa 2003).
CNPC also bought Canadian PetroKazakhstan, which operates in Kazakhstan and extracts 9.5 % of the oil in the country, for 4.2 billion dollars in 2005. When the news that another Chinese company, CITIC, would buy shares of Nations Energy company was announced, this led to complaints in Kazakhstan. The main complaint was that the agreement in question would threaten the national security of Kazakhstan. The agreement to run the "Karajanbas" oil deposit took effect only when CITIC promised that it would give half of its shares to Kazakhstan's "KazMunayGas" company within a year.
In response to these rising tensions, the President of Kazakhstan, Nursultan Nazarbaev, made a five-day visit to the People's Republic of China in late December in 2006. During this visit, which was the second visit made in the same year and bore significance in many respects, necessary agreements
1 In August 2003, CNPC purchased 35 % of Sudi Nimir Petroleum Ltd., a joint company of Texaco North Buzachi Inc. operating at Northern Buzachi reserves. It bought the rest from ChevronTexaco, but a short while later sold 35 % to a Canadian company. As a result of this, 50 % of this reserve, which contains 300 to 500 million barrels of oil, was sold to a Chinese firm whereas the remaining 25 % was shared between Russian Lukoil and Indian Mittal company.
were signed for the construction of the second part of the Atasu-Alashankou oil pipeline, which began in 2004 and was opened in 2005. With these agreements, it was agreed that the lines would be connected to the existing Kenkiyak-Atirau pipeline. Also, the pipeline for which the agreement was signed in 1997 and which extended from Western Kazakhstan to Western China would be constructed. When this project is completed, China will be able to import 10 to 20 million tons of oil, at least 10 % of the country's annual energy need. This figure is expected to rise further when oil production increases in Kazakhstan (Marketos 2008). Although there are debates about the cost of this line2 and whether there are enough resources to meet the existing costs, China views the 3000 km pipeline as an essential aspect of its energy diversification plans. According to some researchers, the connection of the deposits that Chinese companies have bought to this pipeline constitutes China's general energy strategy (Laruelle and Peyrouse 2009: 45).
Moreover, the Chinese administration believes that thanks to this pipeline, it will increase the investments in the Xing Jiang region and thus contribute to political stability (Marketos 2008). The Kazakhstan-China pipeline constitutes part of the four big oil and natural gas pipeline projects planned by China that are a total of 13.500 in length and connect Russia and Central Asia to China. China promised to make an investment of 12.5 billion dollars for this construction project (Gladney 2001: 215). During Nazarbaev's visit, an agreement in principle was also reached that a gas pipeline be constructed for transporting Turkmen gas to China via Kazakhstan, which would deal a blow to Russia's monopoly on natural gas in the region.
With a change of administration in Turkmenistan, concerns arose as to whether the agreement made during the Niyazov period about exporting 30 billion cubic meters of gas to China annually would be in place or not. The new leader, Berdimuhammedov, announced that the international agreements were valid. In April 2006, the agreement signed by the Turkmen leader concerning the construction of Turkmenistan-China pipeline and provision of 30 billion cubic meters of gas in 30 years was confirmed by the additional agreements that were signed during his visit to Peking in July 2007. The agreements signed in 2007 stipulated that the parties would activate the bilateral energy agreements. CNPC and "Turkmengas" made agreements about buying and selling gas and starting exploration and production efforts at the "Bagtiyarlik" deposit on the right bank of the Amu-Derya River. It was later agreed that exports from Turkmenistan to China would increase a further 10 billion cubic meters (July 2009) (Turkmenistan State Information Agency 2009).
China is improving its relations with other countries of the region besides Kazakhstan. Having reached an agreement with Kazakhstan and Turkmenistan on the China-Central Asia gas pipeline, China's national CNPC company signed a 600-million-dollar agreement with Uzbekneftegaz of Uzbekistan on October 15, 2008 to run the Mingbulak deposit in the province of Namangan and 23 medium-size deposits in the province of Bukhara (Olcott 2006: 34).
The hydro-energy infrastructure similar to the infrastructure in the oil and gas sectors in the region dates from the Soviet era. Having a more modest presence in the region than Russia, China is involved in small and medium size projects (Laruelle and Peyrouse 2009: 49). China made a landmark decision and undertook the construction of the Moinak power station on the Charin River in Kazakhstan.
In addition, China signed an agreement concerning the use of Sari- Caz hydro-energy resources in Kyrgyzstan (Kaukenov 2008). Additionally, China made a promise worth 300 million dollars to extract oil and gas and transferred 70 million dollars to Uzbekistan in 2002 for the modernisation of 10 probe equipment within the framework of a 600 million aid project (Dongfeng 2003: 8).
2 Some Chinese experts question the security of these long and costly pipelines and point out that instead of them, bringing liquidated natural gas from Australia and Indonesia to industrial cities in need of energy would be more advantageous. See Daojiong Zha, "China's Energy Security: Domestic and International Issues," Survival, Vol. 48, No. 1, Spring 2006, p. 184-185.
China also signed numerous agreements concerning atomic energy. For example, during Chinese Prime Minister Wen Jiabao's visit to Kazakhstan in late 2008, Kazakhstan's KazAtomProm, China Nuclear Guangdong Power Corp (CGNPG), and China National Nuclear Corp (CNNC) signed long term cooperation agreements on joint uranium operation, uranium production for nuclear power stations, and construction of new facilities (Kaukenov 2008 ).
Since these steps will reduce both China's dependence on the USA and the dependence of the countries of the region on Russia, they will increase China's influence in the region because countries of the region will perceive China as a gateway to the energy markets as well as the Asia-Pacific economy and world markets. In this context, mutual economic dependence has led to a positive perception of China.
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