China Frets Over Russian Gas Row


2006.01.24
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China has been closely watching a gas dispute between Russia and Ukraine to see whether Moscow can be trusted as a reliable supplier of energy, experts say.

Beijing appears worried that Russia could use the same tactic on China that it has used on its neighbor Ukraine, which suffered a cutoff of Russian gas supplies Jan. 1. The conflict erupted when the Russian monopoly Gazprom demanded a fourfold increase in prices for gas.

Marshall Goldman, associate director of Harvard University’s Davis Center for Russian and Eurasian Studies, said that Ukraine’s troubles carry “lessons” for China.

Asian impact

Everybody is focused on the impact on Europe...but very few people are focused on the impact on Asia. And clearly the Chinese should be paying attention to it.

“Everybody is focused on the impact on Europe,” Goldman said, “but very few people are focused on the impact on Asia. And clearly the Chinese should be paying attention to it.”

China is likely to view Russia’s dispute with Ukraine as a reason to avoid depending on Russian resources and to rely for most of its energy needs on the Middle East instead, Goldman said.

Russia supplied slightly less than 10 percent of China’s imported oil in the first 11 months of last year, while over 48 percent came from the Middle East.

Goldman recalled that the Soviet Union once cut off oil to China in 1967. “And [Russian President Vladimir] Putin has said—I’ve heard him say it personally—that there’s no reason in the world why Russia should not use energy as a diplomatic weapon.”

Frank Verrastro, director of the energy program at the Washington-based Center for Strategic and International Studies, agreed that Ukraine’s experience will keep China on its guard.

No guarantees

“You don’t want to be overly dependent on any single source of oil or natural gas,” Verrastro said, adding that China is now working to expand its gas imports from other countries by building terminals to handle shipments of liquefied natural gas (LNG).

“Since most of [China’s] growth right now is in the coastal region,” he said, “I would think that the Middle East is a much better source of imported LNG or oil at this point.”

You don’t want to be overly dependent on any single source of oil or natural gas.

Russia’s move against Ukraine has shaken confidence in Russia at a time when it is taking over the rotating chairmanship of the Group of Eight (G8) leading industrialized nations. In December, Putin had said energy security would be Russia’s theme for meetings of the group this year.

Despite the setback to Russia’s reputation arising from the dispute, Goldman said, there is no guarantee against similar energy cutoffs in the future. “If it could happen to Ukraine, it could happen to China. It could happen to anybody who’s a customer. That’s just the way it is.”

Original reporting by Michael Lelyveld. Edited for the Web by Richard Finney.

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