China’s Emerging Energy Nexus with Central Asia

China’s quest for energy security has driven it to the greater Caspian basin, a region whose resources were once the proprietary domain of the Soviet Union but are now available to the highest bidder. The geographical proximity of the countries in the region, many of which border China, has made them attractive candidates as suppliers of both crude oil and gas. In addition, the lack of a strong U.S. military presence in Central Asia, especially one that can counter China’s massive land power, has also made it an appealing source of energy in the eyes of Chinese planners. There would be no need for the energy to be transported across the ocean—where China’s energy supplies would be vulnerable to potential maritime interdiction by U.S. and Indian navies. Yet, China’s grab for energy resources in Central Asia have not gone unnoticed. U.S. observers have watched with alarm as Chinese firms have purchased entire fields of gas and oil for exclusive use. To refute these U.S. concerns, China is now calling for an international dialogue on energy security (China Daily, June 22; punjab.com, June 22).

The “Go West” Strategy

At the 16th Party Congress, China developed a “Go West” strategy to pursue both Russian and Central Asian energy sources and has already begun making significant inroads into the region. Russian energy giant Gazprom recently announced that it would begin planning for two pipelines to China that would carry both oil and gas (Chinabroadcast.cn, June 30). These two pipelines, however, will not be ready for quite some time, and so the Chinese have looked to the Caspian basin for supplementary energy suppliers. Already, in December 2005, the Atasu-Alashankou oil pipeline from Kazakhstan to China was opened. The first pipeline of its kind, its completion increased the leverage of both Kazakhstan and China vis-a-vis Russia. Russian oil company Rosneft took advantage of this opening and declared its intention to ship 1.2 million tons of oil through the pipeline by the end of 2006. Russian interests in dominating Kazakhstan’s role as an energy provider combined with the completion of the pipeline and China’s demand for energy almost ensures that the amount of oil flowing through the Atasu-Alashankou pipeline will only increase over time (Interfax, October 12, 2005).

Since the completion of the pipeline, China has engaged in further discussions with other Central Asian states regarding additional pipelines, suggesting that the Atasu-Alashankou pipeline will only be the first among many Central Asia-China pipelines. There have been suggestions that in addition to transporting supplies from Central Asian sources, such a network might also be used to connect Russian oil and gas to China (RIA Novosti, May 31). Indeed, during the first half of 2006, China announced its plans to construct a natural gas pipeline from Kazakhstan to China that would run parallel to its Atasu-Alashankou oil pipeline. In addition, China has discussed prospective gas pipelines with Uzbekistan and Turkmenistan that would link up with the projected gas pipeline. Such a pipeline would not only bring Kazakh gas to China but also connect with Turkmen and Uzbek gas pipelines (China Daily, January 11). In both Uzbekistan and Turkmenistan, China has also engaged in efforts to discuss funding for energy exploration in both states. More recently, it became clear that China intends to import Turkmen gas from Tajikistan through a pipeline that is scheduled for completion in 2009-2010 (UPI, May 31). It is unclear if this is a separate Turkmen pipeline that would be built in addition to the one that China is now discussing with Uzbekistan and Turkmenistan or if it is an alternative to the original Turkmen pipeline. Regardless, it is evident that China has devoted extensive resources to expand considerably its energy infrastructure in several of the Central Asian states.

In spite of these developments with several Central Asian countries, the most important Caspian producer for China remains Iran. Since many of these projects with Central Asian countries will take years to become operational, in the present and immediate future Iran remains the most important Caspian producer for China. In the first quarter of 2006 alone, China’s oil imports from Iran increased by 25 percent in gross volume (Chinanews.cn, June 7). Iran already supplies 15-17 percent of annual Chinese oil imports, and the interest in an overland pipeline from Iran to China, fanciful as that may seem, makes clear that Iran’s role in Chinese energy policy will only continue to increase for the foreseeable future.

Turning to Cooperative Institutions

In an effort to lessen competition as well as reduce prices, Chinese scholars have proposed the creation of an Asian energy association, composed of the largest consumers of energy—Japan, South Korea and India. The idea of an inter-Asian energy association was formally pursued by former Indian minister Mani Shankar Aiyar when he visited China in 2005. During the trip, he and his Chinese interlocutors engaged in admittedly speculative, but nonetheless revealing discussions regarding China’s potential participation in the projected Iran-Afghanistan-Pakistan-India pipeline (UPI, February 22; Indo-Asian News Service, January 13). Likewise, if the projected Turkmenistan-Afghanistan-Pakistan-India pipeline project is implemented, it too will likely attract Chinese participation. Given that the pipeline project has been in talks for a decade, however, it seems unlikely to occur in the near future. Unsurprisingly, during his February visit to Beijing, Pakistani President Pervez Musharraf spoke very positively about Pakistan’s potential to become an energy provider to China (Reuters, February 21). Were this energy relationship to materialize, it would only heighten the existing nexus of energy, security and maritime power projection exemplified by China’s support for the construction of a major deep-sea port in Gwadar, Pakistan. Pakistan’s role as an energy provider for China would certainly intensify Chinese efforts to help Pakistan remain secure, stable and non-fundamentalist. This assistance could possibly expand to include non-military assistance in suppressing the separatist uprising in the Balochistan territory, which encompasses the port of Gwadar.

Conclusion

Interest in Central Asian resources is far from being a contemporary phenomenon. During the 19th and early 20th century, the jostling for resources by the European powers of Great Britain and Russia was infamous as the greater Caspian basin became carved into spheres of influence. While the era of what became known as “The Great Game” has long ended, China’s quest for energy has now driven it to search for energy supplies in the Central Asian region. According to Russian sources, despite China’s recent efforts at energy conservation, its inefficient usage of energy guarantees that its energy imports must continue to increase in order to maintain its annual growth rate of nine percent (Moskovskiy Komsomolets, June 21). Thus, as the greater Caspian basin becomes a crucial region for additional Chinese energy supplies, it will inevitably become “a surrogate for Chinese foreign policy” and perhaps the playing field for the “New Great Game” (Australian Journal of International Affairs, June).