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THE WORLD BANK REPORT ON THE CENTRAL ASIA ENERGY SECTOR, AND CHINA’S REACTION
EVGENI SAVKOVICH,
Associate professor at the Oriental Studies Department, Faculty of History, Tomsk State University, Tomsk
The Chinese energy companies gained a foothold in the world market. They have interests even in such poor and remote countries, as Sudan. While in 1990-2000s China National Petroleum Corporation was China’s “flagship”, in the late 2000s the situation changed slightly. China started to diversify not only the main directions of the oil and gas supplies, but also the activities of its own companies abroad. So, the “Central Asia” gas pipeline is constructed in the region by China National Petroleum Corporation, PetroChina company and a number of smaller contractor companies (the joint Chinese-Uzbek company “AsiaTransGas”), which are also connected with the state [1]. China proposes the most profitable construction option – the financial resources, the feasibility study development and the contract and construction projects (the construction itself).
Turkmenistan is a relatively new China's project partner. This country, which follows the “non-joining” foreign policy, has supplied its gas only to Russia for a long time. For Turkmenistan the new project with China is an opportunity to determine the gas prices proceeding from its own economic calculations (the gas price will be calculated on the Turkmen border). For China the existing project is to assure the long-term gas supplies to China via the mainland as well as the trans-Chinese gas pipeline “East-West” joining the existing project.
Beijing is closely watching the world community’s reaction to their projects. So, the Chinese researches keep noting that China’s economic cooperation with the Central Asian states is very effective, but it is not a “pursuit of resources”, although, in practice, it shows the contrary.
The information about the grand plans of PetroChina company in Central Asia appeared in the middle of 2009, in the main, as statements made by the company president Jiang Zemin [2]. The statements had not been concrete till March 19, 2010 [3], when Jiang Zemin, addressing the joint meeting of the All-Chinese Assembly of People’s Representatives and the People’s Political Consultative Counsel of China, said that this year “the company is going to increase the capital expenses, mainly at the expense of widening of capital investment in the projects abroad. The main aspect of the company work will be the Middle East and Iraq as well as the work on the Central Asian gas pipeline project” [4].
It is notable that a day before it, the World Bank published a report by the Energy Agency on Eastern Europe and Central Asia [5]. The report said that “in spite of the fact that Russia and the Central Asian states supply energy resources to the world market, the regions will need about $ 3 trillion of investments within the next 20 years” and “within the next few years (4-5 years) the region’s states can face an energy crisis, while the energy reserves may run low” [6]. The reason is an increase in demand for all the kinds of energy (the primary ones – by 50% by 2030), especially for the electric power (by 90% by 2030). The report also said “without the increase in explored energy reserves the maximum extraction can be reached within 10-15 years, then a slump will occur” [7]. With the existing and potential energy conflicts (between Uzbekistan and Tajikistan, Kyrgyzstan and Uzbekistan) and without the modern infrastructure those problems can arise still earlier. Apart from that, the report contains other information concerning the assessment of the possible development of the region situation and forecasts, for example: “The energy crisis can influence the region’s economic development, 10% of the energy slump can lead to the GDP fall by 1%” and “for the time being Central Asia exports energy resources, but it can start importing them in the future” [8].
On the whole, the anxiety of the World Bank and the Energy Agency is quite understandable – the European and U.S. energy interests in Central Asia, which are mainly “virtual”, are under threat. More than that, the Central Asian route of the energy supplies to Europe is also under threat. However, as it is done in the West, the report covers the energy security of Central Asia itself as well as figures and forecasts that are simple and understandable to Central Asia – how much money are needed for “further development” and what can follow from that.
In addition, the report has to do with China’s plans in the region. Only China can offer so large-scale investments. Some investments have already been realized – after the construction of the large-scale gas pipeline “Turkmenistan-Uzbekistan-Kazakhstan-China” (after the “Kazakhstan-China” oil pipeline) China managed to connect the major oil and gas producers in the region with each other by means of the “Chinese pipeline” and to ensure the gas supplies to China for the next 30 years.
The report immediately drew China’s attention – simultaneously several information agencies published materials about the issue of the World Bank’s new report [9]. So far, the commentators do not comment upon that, and they are not expected to comment upon such problems.
It is notable that China continues to carry on negotiations and to implement the projects even in such countries, as Iran and Afghanistan, where it is difficult to carry out such work. Among those countries Central Asia looks not only like a connecting link – the projects can be implemented in the Middle East, but also as a “seat of relative stability”– the former Soviet republics have not had armed conflicts here.
In the 21st century China does the same things as the USA did, filling its pipeline with the Central Asian gas, making it possible to conserve the gas reserves in Xinjiang and preserving the environment, which conforms to the regional development concept (“Big Strategy of the western regions development”). The same offer was also made to the Russian company “Gazprom” that was supposed to build a pipeline via Ukok plateau.
March 29, 2010
[1] The Chinese project operator in Uzbekistan “Trans-Asia Gas Pipeline Company” is a subsidiary of China National Petroleum Corporation.
[2] PetroChina company is going to increase the volume of foreign capital investments// The information published by Sintszinbao newspaper (Beijing), March 9, 2010
[3] PetroChina company is going to speed up the pipeline construction in Central Asia// The information from the Chzhungo Nenuan Sinsivan information agency, http://news.gasshow.com/pages/news/20100321/432E7FE1B2514606BB4D4099A7.html, March 21, 2010
[4] The same source
[5] Europe and Central Asia Facing Energy Crunch// World Bank. - http://en.sourcews.com/europe-central-asia-facing-energy-crunch, 18.03.10.
[6] The same source
[7] Europe and Central Asia Facing Energy Crunch// World Bank. - http://en.sourcews.com/europe-central-asia-facing-energy-crunch, 18.03.10.
[8] The same source
[9] The World Bank forewarned Central Asia about a potential energy crisis// The information agency “QQ.com” referring to the Tzinkhua Shibao newspaper. - http://finance.qq.com/a/20100320/001227.htm, 20.03.10;
The Eastern Europe and Central Asia will face an energy crisis// The information from the Scientific and Technical Network, China http://www.stdaily.com/kjrb/content/2010-03/20/content_166577.htm, March 20, 2010
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