MONTREAL - Ground was broken in Kazakhstan last week for construction of that
country's segment of a natural gas pipeline from Turkmenistan to China, set to
be the longest and most expensive such pipeline in the world - its length is
usually given as 7,000 kilometers, and although this looks like a rounding-up
of a distance exceeding 6,500 km it may when work is finished be a more
accurate figure than the most recent construction estimate of US$26 billion.
Skeptics about this pipeline remained even after groundbreaking for the
Turkmenistan segment in August last year. However, with the Kazakhstan ceremony
following by a scant two weeks a similar groundbreaking in Uzbekistan, the
conclusion seems unavoidable that this pipeline will be built.
The idea for the pipeline was first sketched on maps as early as
1993 when Western companies began to survey possibilities for energy
development in Central Asia following the disintegration of the Soviet Union.
However, the sheer scale of the project, together with the self-imposed
isolation of Turkmenistan under its former president Saparmurat Niyazov, who
died in December 2006, made it for a long time a non-starter.
Nevertheless, it was Niyazov who in April 2006 signed a framework cooperation
agreement in Beijing with Chinese President Hu Jintao. By July last year, an
agreement was signed between the Chinese National Petroleum Company (CNPC) and
the responsible state agency of Turkmenistan, this time witnessed by Niyazov's
successor, Gurbanguly Berdimuhammedov (sometimes spelt "Berdymukhammedov" in
English-language media).
The Turkmenistani segment is projected to run 188 km from the Bagtiyarlyk
cluster in the eastern part of the country, on the right bank of the Amu Darya
River, to Malai on the border with Uzbekistan, then 525 km across Uzbekistan
and another 1,293 km through Kazakhstan, before passing into China, where it
will run "at least 4,500 km" to Shanghai and Guangdong province.
Inside China, this would almost certainly entail construction of a second
West-East Pipeline, parallel to one opened several years ago from Xinjiang to
Shanghai.
The contract between Turkmengaz and CNPC is not a public document, so the price
agreed is not precisely known, nor are terms for its adjustment over time.
However, well-connected foreign journalists in Ashgabat (neither Russian nor
Chinese) have reported that this price is said to be "over $100" per thousand
cubic meters.
According to press reports, the Chinese side will conduct the geological
exploration and development of the gas fields that will supply the pipeline.
Chinese experts have already told the press that the Bagtiyarlyk fields
together hold 1.6 trillion cubic meters of gas. A first phase will be opened
for up to 10 billion cubic meters per year (bcm/y) from the already-operating
Bagtiyarlyk fields of Samantepe and Altyn Asyr, which are together expected to
supply 13 bcm/y to the completed project.
After this quantity reaches 10 bcm/y, the second phase will be inaugurated,
adding 17 bcm/y from deposits that the two countries will develop under the
terms of the July 2007 production sharing agreement.
The precise pipeline route has not been made public, but the most reasonable
scheme involves expanding the volume of the Bukhara-Tashkent pipeline within
Uzbekistan then taking it through Almaty, Kazakhstan, to Alashankou on the
border, where an existing Kazakhstan-China oil pipeline from Atasu also crosses
into China.
This new gas pipeline, originally projected to carry 30 bcm/y, will be
constructed to carry 40 bcm/y, if not still more in subsequent stages, although
China is set to receive only 30 bcm/y. The other 10 bcm/y will be generated and
at least partly consumed in Kazakhstan.
At first glance, this may look like a concession that Kazakhstan was able to
extract in return for granting transit rights, but that is not the case. CNPC
had earlier started negotiations to import gas from Kazakhstan with the
country's national energy trust, KazMunaiGaz.
The first phase of that project was assigned the figure of 10 bcm/y, and the
Turkmenistan pipeline is, formally speaking, an extension or add-on to the
Kazakhstan-China negotiations. A second stage of the Kazakhstan-China pipeline
was to have increased Kazakhstan's own exports to China to 30 bcm/y. Possibly
some of this will now be consumed in the already populous and still-growing
province of South Kazakhstan.
That is why Kazakhstani sources have been speaking of the possibility of China
constructing feeder lines "from western Kazakhstan". The supplementary
Kazakhstani gas could likely come either from the Karachaganak deposit, where
production has been in thrall to Russian limitations on volumes receivable by
the transborder Orenburg processing plant in southern Siberia; or it could come
from the associated gas in the offshore Kashagan deposit, where China was
rebuffed a few years ago when it tried to purchase a share of the Agip KCO
consortium to be directly involved in Kashagan's development.
Most likely, at least in the beginning, it will come from Chelkar, in the
Aktobe region in western Kazakhstan, where CNPC has been already active for
nearly a decade. From there, a feeder pipeline would logically descend
southwards to Kzyl-Orda and then to the major city of Shymkent (South
Kazakhstan province), thereafter rejoining the extension of the
Bukhara-Tashkent pipeline to Almaty and beyond.
Importantly, China has explicitly linked this geo-economic investment to its
geopolitical aims, by eliciting from Turkmenistan the statement at the time of
the 2007 signing that Chinese interests would not be threatened from its
territory by third parties. This represents a promise that Ashgabat will think
hard and long before allowing a US military presence in the country under the
new Berdimuhammedov regime.
Robert M Cutler is senior research fellow, Institute of European, Russian
and Eurasian Studies, Carleton University, Canada.
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