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    China Business
     Jul 10, 2009
Xinjiang - China's energy gateway
By Robert M Cutler

MONTREAL - The unrest in China's far-west region of Xinjiang, notably in the local capital of Urumqi, comes after 15 years of development and transformation of the area to be a geo-economic springboard for projecting influence into Central Asia and the Caspian region in the wake of the collapse of the Soviet Union.

The vast region, more than three times the size of California and once possibly best known as home to China's nuclear test site at Lop Nor, is becoming increasingly important as a transit route for fuel pipelines from neighboring countries and further afield in addition to its role as an important supplier of its own energy and mineral resources to the industrial east of the country.

The central government has encouraged heavy ethnic Han emigration to the area, formally called the Xinjiang-Uyghur

 

Autonomous Region, to develop these resources while economic incentives are offered to the disadvantaged native Uyghurs to leave for elsewhere in China.

New highways throughout the region's western hinterland are helping to promote international trade flows while strengthening the government's grip. Western Xinjiang borders on Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, and both sides of the Indo-Pakistani Line of Control in Kashmir (as well as the Chinese Line of Control lying across Kashmiri territory claimed by India). Other parts of Xinjiang border on Mongolia, Russia and the Tibet Autonomous Region.

The Chinese National Petroleum Corporation (CNPC) says that Xinjiang holds 17.4 trillion cubic feet of proven gas reserves, but given the frequently difficult geology and often extreme depths, it is not clear how much of that is recoverable. In the 1990s, several Western energy companies paid high fees to test-drill for heavily touted oil - but the holes came up dry.

Nevertheless, according to Chinese sources, Xinjiang represents one-seventh of the country's current oil production and nearly one-quarter of its petroleum reserves. It also holds over two-fifths of its coal reserves.

The landmark West-East Gas Pipeline (WEGP), using resources in Xinjiang's Tarim Basin and running 4,000 kilometers to terminate in Shanghai, was opened in 2005. That should have helped China reduce its dependence on coal - it is seeking to replace some existing coal-generated residential electricity with natural gas sources - but new coal-fired plants continue to be built at an astounding rate, as these are less expensive and demand will not wait to be satisfied.

Last year's official statistical projections foresaw Chinese domestic natural gas demand at the level of 99 billion cubic meters (bcm) with domestic production of 80 bcm. Gas contributed only 2.5% of the country's total energy consumption in 2007, compared with a world average closer to 25%.

With India having bowed out of a proposed Iran-Pakistan-India natural gas pipeline, China has indicated an interest in expanding the now-signed bilateral Iran-Pakistan project into a trans-Pakistan route that would then transit Xinjiang.

The WEGP was opened with a volume of 12 bcm a year, a figure projected to increase to 17 bcm/y. Construction of a second pipeline to run 9,000 kilometers (including its projected eight sub-lines) from northwest Xinjiang began in early 2008. It will run parallel to the first WEGP and be interconnected with it up to Gansu before diverging to Guangzhou.

The volume of the second WEGP is projected at 30 bcm/y and will be supplied largely by the Turkmenistan-China pipeline now under construction across Uzbekistan and Kazakhstan (see Gas pipeline gigantism, Asia Times Online, July 17, 2008). There are further plans to build a third and a fourth WEGP and possibly even a fifth.

All these developments are in line with the "Go West" program announced by Beijing a decade ago. Under this plan, China seeks to build up not only Xinjiang but also Tibet, whose plateau holds astounding mineral resources and to which a rail line was opened last year, and provinces further east but away from the better-developed coast. This could make them the driving forces of the country's economic development over the next few decades.

The "Go West" campaign was originally introduced in tandem with the reinvigoration of the "Hit Hard" campaign, a year-long security clampdown introduced for the 10th anniversary of the 1989 Tiananmen incident. This week's protests by Uyghurs against their official disfavor is not a new phenomenon, nor is their suppression.

The political center in Beijing has sought to render such discontent superfluous with its migration policies for the area. This is not a forced internal population transfer of the sort imposed by Joseph Stalin on the Chechens during World War II, but it is no less official and less compulsory only by degree.

Given the threat of unrest in the homeland of Han-populated China further east, the recent rioting between Han and Uyghurs, killing at least 156 people, can only further alarm the authorities' endemic disquiet over popular discontent.

Dr Robert M Cutler (http://www.robertcutler.org), educated at the Massachusetts Institute of Technology and The University of Michigan, has researched and taught at universities in the United States, Canada, France, Switzerland, and Russia. Now senior research fellow in the Institute of European, Russian and Eurasian Studies, Carleton University, Canada, he also consults privately in a variety of fields.

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