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Hungry for Gas, China Muscles Onto Russian Turf
To see the future of Central Asia, just follow the pipelines to China. China has turned to Central Asia to satisfy its growing appetite for energy for 15 years now. According to a new report by energy giant British Petroleum, nearly half of China’s imported natural gas comes from the region. Moreover, the report argues ...
To see the future of Central Asia, just follow the pipelines to China.
China has turned to Central Asia to satisfy its growing appetite for energy for 15 years now. According to a new report by energy giant British Petroleum, nearly half of China’s imported natural gas comes from the region. Moreover, the report argues that Chinese demand for Central Asian gas will only increase as Beijing continues to wean itself from coal.
China using Central Asia as its energy playground kicks dirt in Russia’s geopolitical sandbox. Russia considers Central Asia within its sphere of influence and Moscow casts a long shadow there. But Beijing supplanting Moscow in Central Asia has been a major trend for Central Asia watchers and BP’s report backs up this shift.
Chinese ambivalence toward human rights and its willingness to build infrastructure in Central Asian countries has won over governments in the region for years. It also helped make it today’s top foreign investor in all five Central Asian states. Central Asian governments — eager for whatever trade, investment, and engagement they can attract — don’t paint the region’s geopolitics as zero-sum. Instead, they attempt balancing the concerns of Russia, China, and the United States. But as American forces leave Afghanistan and the United States pays less attention to the region, it essentially becomes a Russia-China game.
Although Russia has gone the route of military alliances and formal organizations to structure its relationship with Central Asia, the currency of China’s influence is cold hard cash. The country buys huge amounts of Central Asian gas. BP found that in 2013, Turkmenistan supplied China 24.4 billion cubic metres (bcm) of natural gas, Uzbekistan supplied 2.9 bcm, and Kazakhstan supplied 0.1 bcm. That accounts for more than 45 percent of Chinese gas imports and translates into roughly $2.5 billion in annual revenue between the three Central Asian governments.
Undertaking major regional projects also wins China influence. On June 15, China inaugurated another line of the Central Asia-China gas pipeline, which will run from Turkmenistan through Uzbekistan and Kazakhstan to western China. It’s slated to carry 25 bcm of gas. An additional pipeline of similar capacity is due to be completed late in the year. The new lines, along with increased production in Turkmenistan, will increase total capacity through the Central Asia-China pipeline to 65 bcm annually. That far exceeds what Russia will supply China under the terms of their recent $400 billion deal to send 38 bcm annually to China.
With economic growth in Kazakhstan, Turkmenistan, and Uzbekistan reliant on energy revenues and with China, the world’s top energy customer, needing to import 120 bcm of gas by 2020, Beijing holds unrivaled influence in Eurasia.
Turkmenistan, home to the world’s fourth-largest natural gas reserves, is symbolic of China’s strategy for Central Asian energy. Turkmenistan has borrowed more than $10 billion from China to develop the Galkynysh gas fields. Once that gas begins flowing, the first $10 billion in revenue it generates will be used as repayment. This marks a reversal of fortune for Turkmenistan, which prior to China’s expanded role stood near bankruptcy and was shipping its gas through old, Soviet infrastructure that made it beholden to Russia. The Chinese-financed pipeline has benefited Turkmenistan’s neighbors as well, increasing trade links and helping China establish "strategic partnerships" with all five Central Asian countries.
Russia also recognizes and has capitalized on Beijing’s energy needs. But with Russian gas deliveries to Europe in flux amid the fallout from the crisis in Ukraine, Russia is relying more on its newest customer, China, to prop up its ailing economy.
Despite Beijing’s efforts to box out Moscow, Russia still maintains a physical presence in Central Asia. Moscow has military bases in Kazakhstan, Kyrgyzstan, and Tajikistan and plays a key role in regional security through the Collective Security Treaty Organization. The Russian-led Customs Union, soon to be the Eurasian Union, is an attempt to establish economic relevance by abolishing trade barriers and paint itself as the guarantor of stability in a scary post-Soviet world.
But these projects have faltered. Meanwhile, China spreads its largesse across Central Asia, buying up all the gas in sight. Central Asian nations certainly aren’t pawns in all of this, but it isn’t hard to figure out who’s winning in Central Asia.