Kazakhstan and China: oil co-operation
10/03/2006, Igor Dmitriyev
The importance of Kazakhstan for China is growing, Beijing realises it and enters an objective process of mutually beneficial co-operation.
Such is the main conclusion of the recent conference "Kazakhstan and China: Strategic Partnership for Development."
All participants from the Kazakhstani side noted that the Chinese delegation was unusually big and representative, which is quite extraordinary for the Chinese practice of participation in such events.
Not only it was numerous, but also the level of its experts was very high. "It is a very representative delegation," - as our famous political scientist observed before the beginning of the conference.
Naturally, the main (although not the only one) subject of discussion was co-operation in oil supplies form Kazakhstan to China. It could not be otherwise since the unprecedented project of West Kazakhstan - West China oil pipeline project had emerged from many years of non-existence and became reality. Although there are some unresolved problems: it is well-known that the issue of its filling by oil has not been resolved yet.
Nobody tried to avoid that subject at the conference, Chinese expert Li Fenglin, Director of Institute of Social Development of Europe and Asia, Centre for Development Studies, State Council of PRC said the following: "We need a dialogue about obstacles and problems existing on both sides, so that we could realise oil and gas projects faster".
Perhaps, it is to develop this initiative that the Chinese experts made some remarks which seemed to be showing us that despite all the growing dependence of China on the oil import, our role in it is not too big and it is unlikely to ever become definitive. That is, the Chinese guests seemingly wanted to damp our illusions. The same Mr. Fenglin quoted some interesting figures.
"China is not only a consumer, but also a producer of energy," - he said. Thus, in 2004 it produced 1,846 million tons of fuel, including 22.7% of oil.
The dependence on the import this year in the total energy complex was only 5%. The production of oil in 2004 reached 72 million tons, the import - 120 million tons. Currently the oil import from the SCO member states is only 5% of the total import.
But China has to increase the volumes of oil import: according to forecasts, by 2010 the import will reach approximately 200 million tons and in 2020 - 250 million tons. And the role of Kazakhstan will be very big indeed. Of course, if the current problems are resolved.
New additional and bigger opportunities for oil co-operation are opening for our countries plans of re-export of oil from the sea ports of China to Korea and Japan.
It means that PRC is studying opportunities of reselling our oil to the Far East when its own demand is satisfied. In this case the contribution of Kazakhstan will be required in even bigger extent. Besides, this option can have far-reaching geopolitical and geoeconomic consequences.
Leyla Muzaparova, director of the Institute of World Economics and Politics under the First President's Fund of RK, said that it was going to become a basis for a Eurasian oil cartel that could influence the oil pricing in this big region. Of course, in this case Russia's participation is unavoidable and the cartel will be a sort of "triangle" Beijing - Astana - Moscow.
If the call of the Chinese expert to an open dialogue is followed, then certain questions to China also arise.
For instance, Mrs. Muzaparova mentioned among the problems impeding a growth of the oil export to China from Kazakhstan, not only the limited volume of oil production in Kazakhstan today, but also the "limited financial opportunities of China: the budget investments into this area are being cut, in particular, the structure of capital investments into energy is changing, the China's budget investments are being cut in the process of transferring 50-60% of expenditures to the oil & gas ventures."
It is a quite strange situation - the state is acknowledging its growing dependence on the oil export, but at the same time it is reducing its own expenditures for the solution of the problem.
Anyway, the pipeline has to be built from Karamai town, where it is reaching now, deep into China. Also the railway by which a part of the Kazakh oil import comes, must be modernised.