China's Gas Shortage Boosts Central Asia's Role - Rokoto

China’s Gas Shortage Boosts Central Asia’s Role

China’s growing demand for natural gas has been driving closer engagement with Turkmenistan, renewing questions about Russia’s role in Central Asia, once regarded as Moscow’s backyard.

Soaring gas prices appear to be the main motivator behind China’s agreement to restart an unfinished and technically challenging project to drill three new wells in Turkmenistan’s giant Galkynysh (Revival) gas field, which is ranked as one of the five largest in the world.

According to Interfax, the project “of particular complexity” was started by Gulf Oil & Gas FZE of the United Arab Emirates but never completed.

The project is believed to be one of a package of contracts valued at U.S. $9.7 billion (62.6 billion yuan) in 2009 to develop parts of the formerly-named South Iolotan gas field, producing gas under high pressure with sulphur content requiring treatment for export.

State-owned China National Petroleum Corp. (CNPC) Chuanging Drilling Engineering Co. Ltd. won an international tender for the project to be completed in 30 months, Interfax said citing Turkmenistan’s state media.

CNPC is to be paid with 17 billion cubic meters (bcm) of gas annually for three years, the reports said.

Reuters cited an unidentified Chinese industry source as saying that “the wells are likely to start pumping next year, but that the amount of gas CNPC expects to receive could be significantly below 17 bcm (600 billion cubic feet) a year.”

“The CNPC works are aimed at boosting gas output in Turkmenistan, where natural reserve declines and higher local consumption have led to supply reductions to China in recent years,” the industry source said.

But Turkmenistan’s mercurial president, Gurbanguly Berdimuhamedov, offered a more ambitious vision of plans for gas exports to China, predicting that deliveries would gradually rise from the current level of 40 bcm to 100 bcm per year.

That goal may be the highest since CNPC began importing through the 2,000-kilometer (1,242-mile) Central Asia-China Gas Pipeline (CAGP) system crossing Uzbekistan and Kazakhstan over a decade ago.

As of mid-May, supplies have totaled 300 bcm since December 2009 when the CAGP opened the first of three strands known as Line A, Turkmenistan said earlier this year.

Berdimuhamedov also called for construction of a long- stalled Line D project through Tajikistan and Kyrgyzstan, originally predicted to bring CAGP capacity up to 80 bcm per year.

Reuters has cast doubt on Turkmenistan’s volume claims, citing Chinese customs data showing imports of only 29 bcm last year. Even at the lower figure, Turkmenistan is still China’s largest source of imported pipeline gas.

But the challenging Galkynysh project and the Line D plan may be getting a new look as a result of record spot market prices for liquefied natural gas (LNG) and China’s rising demand to replace higher carbon-emitting coal.

“The cost of non-contractual LNG has reached such a price that Chinese importers prefer to increase pipeline gas supplies,” Azerbaijan’s Turan News Agency said.

In late July, Turan cited estimates by the ICIS commodity intelligence service that China’s costs for Turkmenistan’s pipeline gas stood at U.S. $195 per thousand cubic meters (mcm), less than half the LNG spot market price of U.S. $426/mcm at the time.

That differential forced some local suppliers in China to stop buying LNG, Turan said.

Although it is unclear how long the conditions will last, the resulting shortages may have caused reconsideration of previously unattractive projects like the difficult wells and Line D.

While Berdimuhamedov is likely to have overstated the prospects for exports to China, Beijing has encouraged the outlook for growth with offers of extensive cooperation and investment to come.

Possible win-win

During a visit to Ashgabat on July 12-13, Foreign Minister Wang Yi painted a bright picture of the potential benefits from future cooperation, according to caspiannews.com.

Among the plums dangled were offers of solutions to “existing problems” in the oil and gas sector, as well as “new energy, green energy (and) nuclear energy” as part of a “long-term strategic partnership,” the report said.

Wang suggested cooperation on high-tech development that seems unlikely for the isolated, officially neutral autocracy of Turkmenistan. The benefits included development of a digital economy and “cross-border e-commerce.” Wang said.

Most striking was Wang’s offer of a measure of protection from unspecified security threats.

“China is ready to step up cooperation with Turkmenistan in traditional and non-traditional security fields and help the country safeguard its national security,” Wang said.

The timing of Wang’s proposal suggests that China may be inching toward a role as a regional guarantor against risks of instability in the wake of the Taliban takeover of Afghanistan.

But the prospect of Chinese protection may be lost on Turkmenistan, which has maintained its neutrality policy since the regime of Berdimuhamedov’s predecessor Saparmurat Niyazov, as well as ties with the Taliban and successive Afghan governments for over two decades.

While threats from other fundamentalist groups may emerge, Turkmenistan has stayed focused on the stability of its 764- kilometer (474-mile) border with Afghanistan and its long- sought goal of supplying gas across the country to Pakistan and India.

Unlike its neighboring Central Asian republics, Turkmenistan’s neutrality policy keeps it outside the largely-symbolic affiliation of the Chinese and Russian-led Shanghai Cooperation Organization (SCO) and the post-Soviet Collective Security Treaty Organization (CSTO).

On Aug. 26, the Turkmen Foreign Ministry said that trade and transit with Afghanistan for petroleum products, grain and other goods remained unchanged, Interfax reported.

“More than 70 train cars and about 160 trucks pass through the Imamnazar-Aqina and Serhetabad-Torghundi checkpoints every day,” the ministry said.

On Aug. 30, Berdimuhamedov told European Council President Charles Michel that Turkmenistan stood for “settling the situation in Afghanistan exclusively with peaceful, political-diplomatic means and methods.”

He added that Turkmenistan had also granted dozens of permits for flights of evacuation planes through its airspace, Interfax said.

But while Turkmenistan seems unlikely to take China up on its security offers, the initiative leaves questions unanswered about what role in the region China is planning to play.

Security matters

As China’s energy demand grows, it remains unclear whether a military presence in Central Asia will follow and whether it will take the lead in cooperation with Russia on regional security, despite a history of mistrust.

Twenty years since the signing of their bilateral friendship and cooperation treaty and the founding of the SCO, Russia and China have been staging military exercises that could point the way toward joint security operations in the region.

The first recent exercise, named Zapad/Interaction-2021, was held on Aug. 9-13 in northwest China’s Ningxia Hui Autonomous Region. A statement by the National Ministry of Defense made clear that China regarded it as a significant event.

“For the first time, the Russian military was invited to China on a large scale to participate in a strategic campaign exercise organized by the Chinese side,” the official Xinhua news agency quoted a ministry spokesperson as saying.

As part of the exercise, the two sides designed a command information system for mixed groups of Chinese and Russian troops, enabling them to carry out effective coordination, the spokesperson said.

The result demonstrated “the determination and ability of both sides to jointly deal with security threats, and safeguard regional security and stability,” the official said.

A second exercise, dubbed “Peace Mission 2021,” is to be held on Sept. 11-25 under SCO auspices in Russia’s Orenburg region near the border with Kazakhstan. It will include over 550 Chinese troops mainly from the Northern Theater Command of the People’s Liberation Army (PLA), Xinhua said.

Defense and energy experts say that China and Russia are drawing closer, raising the possibility that China could be called upon to shore up Central Asian security, which Russia now guards with a single motorized rifle division near Tajikistan’s border with Afghanistan.

In a recent online forum for the Jamestown Foundation in Washington, military expert Pavel Felgenhauer said that senior Russian officers have had to suppress their misgivings about China’s influence in Central Asia and accept the necessity of relying on China’s strength.

“Russian resources are actually spread out a bit too thin” to cover its strategic needs, including the concentration of forces on the border with Ukraine, problems with Belarus and garrisons in the Far East, Felgenhauer said.

“Where will we get the reserve troops if we need to bring five divisions or more … five divisions at least, strength into Central Asia?” he asked. “And China has the divisions,” said Felgenhauer. China could raise 10 divisions or more “easy” to send into Central Asia “to keep the lid on any kind of insurgency there,” he said.

Moscow does not want to rely on Chinese involvement in the region, but it appears to be preparing to do so, “because the alternative is seen as worse,” Felgenhauer said.

The potential for Russian and Chinese security cooperation in Central Asia is arguably not the result of sudden change in Afghanistan, but rather the consequence of development over time.

“From my point of view, Russia and China have been reconciling any differences or rivalry over Central Asia ever since the creation of the SCO was announced in 2001,” said Edward Chow, senior associate for energy security and climate change at the Center for Strategic and International Studies in Washington.

“What’s happening in Afghanistan only pushes their cooperation and coordination closer,” Chow said.

Left unanswered is whether China can be relied upon to safeguard the competitive energy interests of Turkmenistan and Russia with equal commitment.

Russia has invested some U.S. $55 billion to develop its 3,000-kilometer Power of Siberia pipeline to export gas to China, competing with supplies from Turkmenistan. Russian pipeline deliveries are scheduled to reach 10 bcm this year and are expected to rise to 38 bcm by 2025.

 44 total views,  2 views today

AliExpress WW
Nayomi SA AE
Eneba Many GEOs
Boutiquefeel WW
Norton [CPS] WW
EnglishDom
Newchic WW
AliExpress RU&CIS
GearBest WW
Libertex [CPS] WW
caviar-phone.ru
Ru vds WW
Floryday WW
Spread the love

Leave a Reply

×

Hello!

Click one of our representatives below to chat on WhatsApp or send us an email to rokoto.net@gmail.com

× How can I help you?
%d bloggers like this: