Oil output growth in Russia and Kazakhstan—the two countries able to produce and move large volumes of oil to China by pipeline—has not been able to keep pace with expected Chinese oil demand growth. Since 2006, Russia’s stagnating oil production and continued robust growth in Chinese oil demand have created large deficits that strongly suggest China’s seaborne oil imports will continue rising.
Projected volume of oil that Kazakhstan intends to produce in the next decade constantly changes. Estimates of Kazakh experts and government officials point to 130-135 million tons. The 50 million tonnes increase in oil production is likely to be split between the Russia and China. The latter one acquired importance for Kazakhstan. Oil exports to China in 2010 totaled 10 million tons, and according to Kazakh experts, the amount could rise to 12 million tons in 2011. The capacity of the Kazakh-Chinese Atasu-Alashankou should be brought up to 20 million tons of oil per year, which is still significantly inferior to Kazakhstan's exports to the Russia. Chinese vector in the next decade will remain for Kazakhstan as one of the priorities. Nevertheless, Russia will remain the biggest energy partner of Kazakhstan. Russia is not the only competitor here for China: Tengizchevroil (TCO), the Chevron-led consortium developing the giant Tengiz oil field, increased crude oil output by 15% to 25.9 million tonnes last year, the company said in a statement on Thursday. TCO is also expected to submit an expansion plan for the project this year.
While it is imperative for China to expand and diversify its energy sources, Uzbekstan is promoting its energy development projects. On Monday, the Tashkent government announced it was seeking hundreds of millions of dollars in foreign direct investment (FDI) to invest in its oil shale production sector. These investments look likely to keep Uzbekistan in the top tier of energy-producing nations in the Asian heartland for decades. However, the participation of new players has made the competition increasingly intensive. TOKYO – Uzbek President Islam Karimov and Japanese Prime Minister Naoto Kan reached an accord for Japanese and Uzbek companies to cooperate in the exploration and development of Uzbek natural resources on February 10. In their accord, Karimov and Kan stressed co-operation in energy conservation, renewable energy, alternative energy, reconstruction of Afghanistan and the fight against terrorism in Central Asia. Japan also plans to lend Uzbekistan up to ¥18.067 billion (US $219m) to electrify the 325km Karshi-Termez Railway.
Meanwhile, Russian energy company Gazprom will resume exploration of oil and gas fields in the south of Kyrgyzstan after ethnic violence last summer forced the firm to shut down its operations in the country. Kyrgyz Minister of Natural Resources Zamirbek Esenamanov said Russia’s largest company will take up work at two oil and gas fields that were suspended when deadly ethnic violence tore through southern areas of the republic last June.
Finally, in security domain, the US is seeking to establish long-term military presence in Central Asia. But it is clear that there is more to the objectives of the United States and other NATO countries in Afghanistan and Central Asian states than purely military and counter-terrorist operations.
Articles referred to in this post:
"Twilight in the Tundra: Russian and Kazakh oil production cannot keep up with China’s rising demand"
"Казахстанская нефть -- В ближайшие годы экспорт углеводородов пойдет через Россию" (Kazakh oil - exports of hydrocarbons goes through Russia in the coming years)
"Tengizchevroil ups crude oil production by 15% in 2010"
"Oil shale will keep Uzbekistan among region's top energy producers"
"Узбекистан, Япония достигли соглашение в области энергетики" (Uzbekistan and Japan reach energy accord )
"Gazprom to resume Kyrgyz oil and gas exploration"
"Центрально-Азиатские штаты Америки--Новая военная стратегия США подразумевает доминирование Вашингтона на постсоветском пространстве" (Central Asian States of America--The new U.S. military strategy involves the domination of Washington in the post-Soviet space)
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