China Pursues New Central Asian Gas Route

An analysis by Michael Lelyveld
2014-02-10
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Chinese President Xi Jinping plants a tree in Kazakhstan's capital Astana during his Central Asian trip, Sept. 7, 2013.
AFP

China appears to be buying an expensive insurance policy for natural gas imports from Central Asia with its plans to build a pipeline through Tajikistan and Kyrgyzstan.

Since 2006, China has invested heavily in developing gas imports from Turkmenistan, opening its Central Asia Gas Pipeline (CAGP) across Uzbekistan and Kazakhstan at the end of 2009.

So far, state-owned China National Petroleum Corp. (CNPC) has built two strands of the CAGP and plans to complete a third on the 2,000-kilometer (1,242-mile) route to Xinjiang this year.

The growing gas imports from Central Asia have assumed increasing importance to China as it seeks to reduce its reliance on high-polluting coal.

Last year, the CAGP system supplied some 27 billion cubic meters (953 billion cubic feet) of gas to China, accounting for over half of its gas imports and nearly one-sixth of its consumption, according to figures from CNPC and Platts energy news.

Under a framework agreement in 2012, Turkmen gas exports to China are destined to rise to 65 billion cubic meters (2.3 trillion cubic feet) per year, Interfax said.

But China's next expansion of pipeline capacity is planned to take a new route from Turkmenistan through Uzbekistan, Tajikistan and Kyrgyzstan to the border with Xinjiang.

In September, Chinese President Xi Jinping confirmed accords for the new pipeline known as Line D with his Kyrgyz and Tajik counterparts, Almazbek Atambayev and Emomali Rakhmon, during a visit to the region.

Atambayev signed the ratification of an intergovernmental agreement for the U.S. $1.4-billion portion of the project through Kyrgyzstan on Dec. 31, Interfax reported.

The line is due to be completed in 2016, Reuters reported, while the pace of the process in Tajikistan is still unclear.

Cross-border supply risks

China has said little about the reasons behind the new route bypassing Kazakhstan through the two poorest and arguably least stable countries of former-Soviet Central Asia, although the choice may increase cross-border supply risks.

Unlike its neighbors, Tajikistan and Kyrgyzstan are almost entirely dependent on oil and gas imports, producing little on their own.

CNPC has disclosed few details about the exact path of the project, saying only in a September release that "the route design of Line D is underway."

The new link from Turkmenistan will include 205 kilometers (127.4 miles) of pipeline through Uzbekistan, 415 kilometers (258 miles) in Tajikistan and 225 kilometers (140 miles) in Kyrgyzstan, said a report in October by the Central Asia-Caucasus Analyst, published by Johns Hopkins School of Advanced  International Studies.

But Edward Chow, senior fellow in the energy and national security program at the Center for Strategic and International Studies in Washington, said there are still many questions surrounding Line D.

"From a Chinese point of view, diversification of routes would be a very good thing if it were affordable," Chow said.

"Whether it is affordable or not depends on the volume of gas you can get out of Turkmenistan."

"You don't build a pipeline just in case. You have to use it," he said.

China's plans in the region have sparked speculation since a report early last year that Line D might bypass not only Kazakhstan but also Uzbekistan and Kyrgyzstan, taking a route through northern Afghanistan and Tajikistan.

Sudden gas shortages

According to the industry weekly Nefte Compass, CNPC's decision on Line D was driven by complaints of sudden gas shortages in China's central Hubei province last winter, due to diversions from the CAGP in southern Kazakhstan.

Earlier instances of winter disruptions on the CAGP system have been reported since 2011 as Turkmen gas has been used to offset shortfalls of Uzbek supplies to other Central Asian states.

Last week, a temporary shutdown of gas from Uzbekistan interrupted service in the southern Kazakh city of Shymkent, the tengrinews.kz website reported. Winter shortages of Uzbek gas have also reduced supplies to Kyrgyzstan, the 24.kg website said.

The sporadic problems have served as a reminder of the energy security risks of multiple border crossings on the long 7,000-kilometer (4,350-mile) lines from Central Asia to China's eastern cities.

Chow declined to speculate on the role that the reported diversions and service problems may be playing in decisions to invest in an alternate route. The more pressing question is how much gas Turkmenistan can produce for export to China, he suggested.

"Spare capacity is something good to have, but you don't build a spare pipeline," he said.

But if gas flows keep rising, diversification of routes may be desirable.

"They have a lot of eggs in that Uzbek-Kazakh route already with Lines A, B and C," Chow said.

Aside from threats of disruptions, China may be motivated to  develop access from Tajikistan after CNPC acquired a one- third stake in the country's giant Bokhtar oil and gas discovery last year.

The field may contain over 3.2 trillion cubic meters (113 trillion cubic feet) of gas reserves, Canada-based Tethys Petroleum has said, although development plans still appear to be at an early stage.

Unclear

But it is unclear whether the Line D project may only be trading one set of risks for another, particularly since China previously resisted appeals from Kyrgyzstan in 2007 to build the first CAGP line through the impoverished country.

Kyrgyzstan had a previous record of taking transit gas from Soviet-era pipelines, causing periodic shortages in southern Kazakhstan. China's risk may now be reduced with the pending takeover of the Kyrgyz gas system by Russia's Gazprom for U.S. $1 (6 yuan) and the assumption of Kyrgyzgaz debts.

But other risks may be rising for the Line D plan due to cross-border conflicts, including a recent clash between normally-cooperative Tajikistan and Kyrgyzstan that injured guards on both sides.

The Jan. 11 incident involved Kyrgyz efforts to build a road around a Tajik enclave in Kyrgyzstan's southern Batken region, sparking an argument over disputed territory, the Institute for War and Peace Reporting said.

After shots were exchanged, Tajik forces fired mortar rounds at their Kyrgyz counterparts, claiming self-defense, according to the eurasianet.org website. The clash led to the closure of the entire 970-kilometer (603-mile) border between the two countries, Interfax reported.

The spike in tensions may be temporary, but it could add to the  risks of a complex cross-border project like Line D.

Conflicts between Tajikistan and Uzbekistan over dam-building and water supplies have disrupted traffic on their 1,333- kilometer (828-mile) bilateral border for years.

The problems renew questions about the role that China is prepared to play in Central Asia and how it would respond in case of threats to a project like Line D.

So far, China has shown little inclination for involvement in Central Asian entanglements, although its energy security interests may depend on cross-border cooperation and keeping the peace.

If the Line D project materializes, it may only add to the complications for China's gas imports rather than reducing its energy security risks.

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