Archive for September, 2007
News Roundup - September 30, 2007
Reuters: Kazakhstan Says Higher Oil Stake Not Key Goal
Kazakhstan said on Thursday that securing a bigger stake in the huge Kashagan oilfield was not its main goal in a row with the project’s Italian-led consortium of Western oil majors…
Reuters: Eni Says Kashagan Work Ongoing, Confirms Target Date
Eni Chief Executive Paolo Scaroni said on Thursday that work at the Kashagan oil field in Kazakhstan was going forward and confirmed the third quarter of 2010 was the forecast date for production…
CNN Money: Eni CEO Sticks With ‘10 Kashagan Output Start; Work Continues
Eni SpA (E), the Italian oil and gas company that leads a consortium developing the Kashagan field, is sticking with its forecast given earlier in the year for output to start in 2010 at the Kazakh project, Chief Executive Paolo Scaroni said Thursday…
Eurasia Insight: Anti-Terror Exercise Held at Kazakhstan’s Baykonur Cosmodrome
Antiterror exercises at Kazakhstan’s Baykonur cosmodrome, which began today, will make a significant contribution to strengthening the CIS’s potential of combating terrorism. Cosmonauts Fedor Yurchikhin and Oleg Kotov, members of the 15th crew of the International Space Station [ISS], said this, welcoming the start of the exercises…
Global Voices Online: Bid Politics and Human Lives
But politics first: Andy-taker draws attention to the fact that ministers in Kazakhstan are being reshuffled, migrating from one government to another in a manner which bears no particular relation to their professions. Pretty much the same happens on lower levels; maybe this is the reason for the people’s dissatisfaction with the officials? …
Mondo Visione: Wiener Börse Launches Cooperation With Kazakhstan Stock Exchange
In the future Wiener Börse and the Kazakhstan Stock Exchange will work together: The President of the Kazakhstan Stock Exchange, Azamat Joldasbekov, and the joint CEOs of Wiener Börse, Michael Buhl and Heinrich Schaller, signed a Memorandum of Understanding to this effect in Vienna yesterday afternoon…
News Roundup - September 27, 2007
BBC: Threat to investors in Kazakhstan
Kazakhstan’s parliament has passed a law allowing the government to break contracts with foreign companies. The law still needs to be adopted by the higher chamber of parliament and ratified by the president…
FinanceAsia.com: Could Kazakhstan Suffer a Credit Crisis?
Central Asian bankers were unusually candid – at times even argumentative – at what many had expected to be a staid banking conference in Kazakhstan on Wednesday. Instead, the meeting turned into a lively debate over whether or not the country’s banks are facing a crisis…
Forbes: PetroChina Parent’s Xinjiang Oil Pipeline Enters Operations
China National Petroleum Corp, the parent of PetroChina Co Ltd, said its oil pipeline serving oil fields in Xinjiang region has entered commercial operations, which has linked with the Sino-Kazakhstan crude pipeline…
NewEurasia.net: Resource Nationalism and Failure in Ratings
The Kazakh government now can review and break up the contracts in extractive sectors. From now on, according to the new bill unanimously adopted bill by the Kazakh parliament, it will be legitimately a one-way road, not requiring negotiations as such…
The Financial Times: Turkmenistan Opens Up Gas and Oil Fields
Turkmenistan’s president declared the gas-rich but isolated central Asian state “open to the world” on Wednesday, as it stepped up its efforts to deepen relations with the west since the death of its autocratic leader last December…
Stratfor: Kazakhstan: End of an Era
The Kazakh parliament approved a measure Sept. 26 empowering the government to re-fabricate any contract it desires. If implemented, the decision will mark the end of Kazakhstan’s oil-fueled economic growth…
Gazeta.KZ: Kazakhstan Has No Objection to Objective Cost Increase on Kashagan Development Project
Kazakhstan has no objection to objective cost increase on Kashagan development project, said today in the interview to journalists Sauat Mynbayev, the RK Minister for Energy and Mineral Resources…
Reuters: Kazakhstan Holds Rates, Delays Bank Reserves Rise
Kazakhstan’s central bank said on Thursday it would keep its key refinancing rate unchanged at 9.0 percent despite inflationary pressure…
Kazakhstan Seeks A Foreign Partner for a Five-Billion-Dollar Petrochemical Project
By the end of 2007, KazMunaiGas and SAT & Company hope to find a partner to build a new petrochemical complex in Kazakhstan. The speaker of the Kazakh national oil company announced that KazMunaiGas is currently conducting talks with a number of foreign companies, including Netherlands-based Basell, US-based Dow Chemical, and also several Chinese and Japanese companies. The plant would annually produce 1.2 million tons of ethylene, polyethylene and polypropylene and would process gas from the Tengiz oil field, led by U.S. Chevron, in its first stage. It would later also process gas from the Kashagan field, led by Italy’s Eni.
Currently, KazMunaiGas is conducting negotiations with Tengizchevroil, the operator of the Tengiz field, about the price of the crude that will be used in the new complex. These negotiations should be concluded within a month when KazMunaiGas – along with SAT & Company – will announce its foreign partner. The new foreign partner will receive an equity stake in the $5 billion project although it is not yet clear which of the current partners will cede its stake.
The construction of the project is set to begin in 2008 and finish in 2012, and it appears likely that its capacity will be expanded to accommodate crude from Kashagan. The construction of this complex is part of Kazakhstan’s drive to take ownership of and develop its domestic petrochemical industry.
For more information on Kazakhstan’s effort to develop its petrochemical facilities, read here.
News Roundup - September 26, 2007
Reuters: Kazakhstan Allows Government to Break Oil Contracts
Kazakh lawmakers passed a bill on Wednesday allowing the government to unilaterally break contracts with foreign companies, potentially threatening an Italian-led consortium developing a giant oilfield…
Wall Street Journal: Kazakh Oil GemIs Ripe for Takeover
A family dustup in energy-rich Kazakhstan has turned one of the country’s largest oil companies into a potential takeover target, attracting interest from some of the biggest players in the global oil industry…
MarketWatch: Chevron Appoints New Australian Managing Director
Jay Johnson will take up a new role as managing director of Chevron’s Eurasia Strategic Business unit based in Kazakhstan…
UN News Center: Countries Should Join Kazakhstan in Renouncing Nuclear Arms, President Tells UN
The President of Kazakhstan today called on national leaders attending the annual United Nations General Assembly’s high-level debate to follow the example set by his country by renouncing nuclear arms and enjoying the peace dividend that will ensue…
Eurasia Insight: Paper Says Central Asian Price Hikes Give Russia Chance to Increase Influence
Russia has a chance to become the food basket for countries of the region. Prices on bread and all other foodstuffs are rapidly growing in Central Asia. The reason is the poor harvest and the increase in cost of wheat imported from Russia and Kazakhstan. Experts fear that the food crisis in the Central Asian region may grow into a political crisis…
Eurasia Insight: Police in Kazakh East Free Two Uzbek Women from Sexual Slavery
Officers of the migration police in East Kazakhstan Region (EKR) have freed two Uzbek female citizens who had been subjected to sexual exploitation, the Interfax-Kazakhstan news agency today learnt at the press service of the EKR’s interior department…
Gazeta.KZ: Kazakhstan Proposes to Develop Global Energy and Ecology Strategy
Kazakhstan proposes in the frames of the UN to develop Global Energy and Ecology Strategy, said yesterday during 62d session of the UN General Assembly the president of Kazakhstan Nursultan Nazarbayev…
A Possible New Split in Ak Zhol
The leaders of Kazakhstan’s opposition party Adilet (Justice) which merged this year with another opposition party Ak Zhol (Bright Path) expressed their wish to exit the short-lasting coalition. According to Interfax Kazakhstan, the leadership of Adilet came to this conclusion late last week during a meeting to discuss its goals following Ak Zhol’s unsuccessful showing in August’s parliamentary elections.
Despite the hope of the opposition prior to the elections, the Nazarbayev-led Nur Otan party became the only party to make it past the 7 percent threshold needed to get representation in the lower house of the parliament. Leaders of the All-National Social Democratic Party, Ak Zhol, and the People’s Communist Party of Kazakhstan made a joint appeal to Nazarbayev, demanding that the parliamentary elections be canceled as illegitimate.
News Roundup - September 25, 2007
The Financial Times: Eni in Kazakhstan
As much as Paolo Scaroni tries to keep investors focused on Eni’s opportunities elsewhere, talk keeps coming back to Kashagan, the giant oil field in Kazakhstan…
Forbes: Frontier Mining Says Benkala Stake Purchase Delayed by Kazakhstan Admin Change
Frontier Mining Ltd said the approval of its 50 pct stake purchase of Benkala Project located in northwestern Kazakhstan from Coville Intercorp has been delayed on administrative grounds affecting the approval of its subsoil use contract (SUC)…
Wall Street Journal: Giuliani Fund Raising Reaches Into Kazakhstan
Former New York Mayor Rudy Giuliani’s campaign is looking for political cash this week in an unlikely place: Resource-rich Kazakhstan, where the Republican presidential front-runner’s law firm does substantial business in the often murky oil, gas and minerals industries…
EurasiaNet Insight: The OSCE Remains Divided over Kazakhstan’s Chairmanship Bid
Now that constitutional amendments are in force and a new legislature in place, Kazakhstan is focusing on attaining a long-held goal: chairing the Organization for Security and Cooperation in Europe in 2009…
Business Insurance: Allianz Expands in Kazakhstan
Germany’s Allianz S.E. is entering the Kazakhstan market by acquiring ATF-Polis, one of the country’s leading insurance companies, the Munich-based insurer announced Monday…
NewEurasia.net: Humor in Kazakhstan: Laugh or Cry
The humor here is rooted deep in the centuries when Kazakhs were nomads. Despite a rather tragic history, Kazakh folklore is stuffed with easy-going characters playfully coming out of troubles with smile on a face, such as Aldar Kose, Zhirenshe and Yer-Tostik…
Journal of Turkish Weekly: ENI, Kazakhstan Debate May Affect Samsun-Ceyhan Pipeline
ENI is the major partner on the Samsun-Ceyhan pipeline, and Kazakhstan is the source of the oil that will be transported through the pipeline. The problems between these two sides increase anxieties over the future of the pipeline…
Reuters: Severstal Ups Celtic Resources Stake to 26.6 pct
Russian miner and steel maker Severstal raised its stake in London-listed miner Celtic Resources to 26.6 percent from 22 percent, paying 6 million pounds ($12.2 million) for the additional shares…
The Financial Times: Celtic Rejects Severstal Approach
London-listed gold miner Celtic Resources on Tuesday rejected a £123m takeover bid from Severstal, the Russian steelmaker and Celtic’s largest shareholder, saying it “very significantly undervalued the company and its prospects”…
Radio Free Europe / Radio Liberty: Kazakh, Turkmen Presidents Head To New York
The Kazakh and Turkmen leaders are heading to the United States to address the United Nations General Assembly…
News Roundup - September 22, 2007
International Herald Tribune: Kazakh President Backs Chevron Oil Venture
Chevron secured crucial backing Friday from the Kazakh president for its huge Tengiz oil project, allaying concern that the government might try to shut down the project following accusations of environment violations…
CNN Money: Kazakh PM Praises Chevron’s Work In Kazakhstan
Kazakh Prime Minister Karim Masimov Friday praised Chevron Corp.’s (CVX) work in Kazakhstan following a call Thursday by a Kazakh lawmaker to shut down the Chevron-led Tengizchevroil, the country’s largest oil producer, for alleged environmental violations…
AGI News: Scaroni, No Reason to Be Pessimistic on Kashagan
‘There is no reason to be pessimistic regarding negotiations on Kashagan,’ said ENI managing director Paolo Scaroni, who is today in Mantua for the inauguration of a petrol station with a hydrogen pump. Scaroni has not provided any forecast concerning the negotiation: ‘In a negotiation involving so many players it is not easy to make predictions,’ he said…
Forbes: Chevron: Trouble At Tengiz?
When Kazakh Prime Minister Karim Masimov came to power in January he promised to put the country’s foreign oil partners under the microscope and lay down the law…
Telegraph: Kazakhstan: Make Benefit Funky Cities
New direct flights and a stylish guide book are set to heighten interest in Kazakhstan, reports Adrian Bridge. When it comes to hedonistic hotspots, the central Asian cities of Astana and Almaty do not readily come to mind…
Freedom House: Groups Strongly Urge U.S. to Remain Opposed to Kazakhstan’s Leadership of OSCE
Freedom House, together with six of the U.S.’s most prominent human rights organizations, issued a letter today to Secretary of State Condoleezza Rice, urging her to strongly oppose a bid by Kazakhstan to chair the Organization for Security and Cooperation in Europe (OSCE) in 2009…
Oil and Gas Eurasia: KazMunaiGas Puts a New Priority on Offshore Projects in Kazakhstan
Among Caspian offshore sectors, the one belonging to Kazakhstan has substantial oil and gas reserves. For national company KazMunaiGaz, offshore fields development is one of the main tasks. In the following interview to Oil&Gas Eurasia the company’s president Uzakbai Karabalin talks about strategy and new offshore development opportunities of KazMunaiGas…
Oil and Gas Eurasia: Kazakhstan Adds Value by Developing Its Petrochemical Industry
Current forecasts of power resources consumption worldwide are indicative of further rapid growth in oil refining and chemical industries. Kazakhstan strives to keep pace with the times by active development of petrochemical projects. This activity is spurned by a number of factors, primarily by significant hydrocarbon reserves in the Caspian region and growth of consumption in both the internal and export markets…
BBC: Counting the Cost of Wheat Price Hike
World wheat prices have risen to a 10-year high following a dramatic fall in harvests sparked by a severe drought in Australia and crop diseases across parts of Europe and the Americas…
Reuters: Azeri Baku-Ceyhan Pipeline to Pump More Oil in 2008
Azerbaijan will pump 20 percent more oil through the BP-led Baku-Tbilisi-Ceyhan (BTC) pipeline in 2008 than this year, a BTC source told Reuters on Friday…
Gazeta.KZ: Chevron Intends to Finish Production Facilities Enlargement Project on Tengiz by 2008
Chevron intends to finish completely by 2008 production facilities enlargement project on Tengiz, said today on the briefing after the meeting with the president of Kazakhstan Nursultan Nazarbayev the chairman of the directors’ board and the main executive director of the corporation David O’Reilly…
Gazeta.KZ: Western CPC Shareholders Agreed to Lower Interest Rates Given on Credit to the Consortium
Western shareholders of the Caspian Pipeline Consortium (CPC) agreed on the meeting held in Almaty from October 1, 2007, lower interest rates on credits given to the consortium and increase tariff for oil swap via pipeline up to USD 38 per ton, reports the agency with reference to “Kommerstant” newspaper…
News Roundup - September 21, 2007
Radio Free Europe / Radio Liberty: Kazakh Official Defends Chairmanship Bid Before OSCE Panel
Kazakh State Secretary Kanat Saudabaev says he is confident his country’s bid to chair the Organization for Security and Cooperation in Europe (OSCE) in 2009 will be accepted later this year…
Banking Business Review: Kazkommertsbank Launches American Express Cards in Kazakhstan
Kazkommertsbank has launched American Express Gold and Platinum credit cards in Kazakhstan, representing the first American Express cards to be issued in the country…
Reuters: Kazakh PM Meets Top Chevron Execs after Warning
Top Chevron executives met Kazakhstan’s prime minister on Friday, praising the Central Asian state for its cooperation a day after the U.S. company came under pressure over its key oil project in the country…
News Roundup - September 20, 2007
Forbes: Scaroni’s Kazakh Challenge
Italian energy company Eni is treating the outcome of a meeting of its Chief Executive Paulo Scaroni with the Kazhakh government as a closely guarded secret. But the outcome of the negotiations — whenever they emerge — will be an important sign of whether Eni can remain at the helm of a joint venture to exploit one of the largest oil fields discovered in the past four decades, capable of pumping out 1.5 billion barrels per day…
Reuters: Kazakh MP Urges Suspension of U.S.-led Oilfield
A Kazakh parliamentarian urged the government on Thursday to suspend the U.S. Chevron-led (CVX.N: Quote, Profile, Research) joint venture operating the Tengiz oilfield in the Central Asian state due to ecological violations…
Gazeta.KZ: Senate Deputy Asks the Prime Minister to Put a Ban on “Tengizchevroil” Work
The deputy of the Senate Gani Kasymov asks the Prime Minister of Kazakhstan Karim Massimov to prohibit work of “Tengiz Shevroil” company on the territory of the republic whilst the problem of sulfur utilization is not solved, reports KZ-today correspondent…
APA: Martin Bartenstein: “Turkmen and Kazakh Gas May Reach Europe via the Nabucco in the Medium Run”
Austrian Federal Minister of Economics and Labour Martin Bartenstein and Azerbaijan Minister of Industry and Energy Natig Aliyev will sign a memorandum of understanding on Azerbaijan’s presence in the Nabucco project…
International Herald Tribune: Caspian Pipeline Shareholders Agree to Hike Transport Tariffs
Shareholders in the only oil pipeline on Russian territory not controlled by the Russian government agreed to increase transport tariffs and restructure the operation’s debt, the Caspian Pipeline Consortium said Wednesday…
Gazeta.KZ: Vice-Chairman of the Board of Directors of “Samruk” State Holding Was Appointed
Kairgeldy Kabyldin was appointed as vice chairman of the board of directors of JSC “Kazakhstani holding on state assets management “Samruk”" according to the order of the Minister of Economics and Budgetary Planning, reports the agency referring to the press service of “Samruk” state holding…
EurasiaNet Insight: Saudi Rep Calls for Condemning Swedish Prophet Cartoon
A representative from Saudi Arabia called on the secretariat of the Congress of Leaders of World and Traditional Religions to condemn the recent publication of Prophet Muhammad cartoons in Swedish press…
CTC Media, Russia’s leading independent television broadcaster, announced that it has entered into a definitive agreement to acquire a majority financial interest in Channel 31 group, one of the leading broadcasters in Kazakhstan…
TradingMarkets.com: Austria Is Interested in Exploring Kazakh Oil and Gas Fields, Minister Says
Visiting Austrian Minister of Economics and Labor Martin Bartenstein said on Monday that his country is interested in exploring new oil and gas fields in energy-rich Central Asian nation of Kazakhstan…
HotNews.ro: OMV Interested in Kazakhstan Resources
Austrian oil giant OMV intends to open several oil and gas projects in Kazakhstan, said Austrian Economy Minister Martin Bartenstein, during a meeting with the Kazakh Energy and Resources Minister, Sauat Minbaev…
RIA Novosti: Two Keys in Kazakh Hands
It is too early to predict which issue will have priority at the 62nd session of the UN General Assembly. If everything goes according to UN Secretary General Ban Ki-Moon’s plan, the session will focus on global climate change. But if everything goes against the declared wishes of everyone, it will concentrate on Iran, or, to be more exact, on the threats of war against Tehran, which have begun to sound more serious in the last few weeks. Surprisingly, Kazakhstan can play an important if not a key role in both debates. It is a country with an impressive record of efforts for a clean environment for the sake of development. It is also Iran’s neighbor and a nation playing a special new role in the search for modern systems of regional security…
Gazeta.KZ: It Is Cheaper to Transfer Gas via Trans-Caspian Gas Pipeline than via “Middle Asia - Center”
It is cheaper to transfer gas via trans-Caspian gas pipeline than via “Middle Asia - Center”, said on Monday, September 17, during the meeting with the Minister of Energy and Mineral Resources of the Republic of Kazakhstan Sauat Mynbayev the head of the European Commission Delegation to Kazakhstan, Kyrgyzstan and Tajikistan, Ambassador Adriaan van der Meer…
Reuters: Chevron Rejects Criticism of Kazakh Operations
Chevron Corp rejected criticism of its environmental record in Kazakhstan on Thursday after a Kazakh parliamentarian urged the government to suspend the U.S. oil major’s operations at the massive Tengiz oilfield due to ecological violations…
Reuters: Azerbaijan to Pump Less Oil through Russia in ‘08
Azerbaijan plans to pump considerably less oil through Russia next year as it uses cheaper alternative export routes, the country’s state oil firm said Thursday…
Kazakhstan’s Pipeline Dependence: Current State and Future Outlook - Part Two - China
Kazakhstan and China
China has a growing presence in Kazakhstan, even though it is a relative newcomer in the race to develop its hydrocarbon reserves. Initially, China’s main goal in establishing relations with Kazakhstan and other Central Asia states lied in delineating and securing its borders following the fall of the Soviet Union. At that time, the Shanghai Cooperation Organization was established as a forum to bring together China and its neighboring Soviet legacy states and help resolve the decades old border dispute.
Another important aspect of Chinese foreign policy towards the newly established Central Asian states was the containment of its Uighur minority. The Western Chinese province of Xinjiang has a large population of Muslim Uighurs, Turkic people and historically and ethnically part of Central Asia. While China has kept any separatist tendencies in Xinjiang under a tight lid, the fall of the Soviet Union and sudden independence of other Central Asia states could not come as a welcome development for the Chinese. Therefore, China has spent a greater part of its diplomatic efforts towards the new Central Asian countries making sure that there would not be any official and unofficial sanctioning of the Uighur separatist movement.
These two security concerns dominated China’s policies towards Central Asia in the 1990’s. China’s approach started changing slowly only in the later part of the decade when China awakened to its needs for both energy and export markets. Trade between China and Kazakhstan commenced almost immediately after the fall of the Soviet Union, mainly driven by the so-called shuttle traders. However, it really took off after 1998 when Kazakhstan and China resolved their dispute over the 1700-kilometer common border. In 2006, the China-Kazakhstan trade volume reached $8.36 billion, and in the half of 2007, it reached $5.97 billion.
Chinese Energy Policy in Kazakhstan
China’s first significant step in its Kazakhstan energy policy occurred in September 1997 when both countries signed a $9.5 billion agreement. The contract confirmed the award to the China National Petroleum Corporation (CNPC) of two projects. The first project involved the development of two new oil fields, Zhanazhol and Kensayak, in the Aktyubinsk region, and the rehabilitation and exploration of the Uzen oil field. The second project was the construction of a 3,000-kilometer pipeline connecting these oil regions to Chinese Xinjiang province.
This agreement was at that time the largest oil deal between a foreign investor and a former Soviet country but the subsequent Asian financial crisis and depression of oil prices delayed both the construction of the pipeline and the rehabilitation of the Uzen field, as well as a more significant Chinese entry into Kazakhstan’s hydrocarbon markets.
The second push to become a significant player in Kazakhstan has been more successful. While CNOC’s bid in 2003 to buy into the consortium developing the Kashagan field did not succeed, in 2004 it was able to take control of the Canadian oil company PetroKazakhstan for $4.0 billion. Overall, while China has not yet achieved a position in one of Kazakhstan’s blue-chip fields like Tengiz or Kashagan, it has amassed, mainly through acquisitions, a significant portfolio of oil assets in Kazakhstan.
In 2004, CNOC began construction of the pipeline to connect its new acquired fields to the Xinjiang province that was agreed upon in 1997. The construction of the pipeline is to be conducted in three stages. The first section of pipeline from the Aktöbe region’s oil fields to the Atyrau was completed in 2003. The construction of the 987 kilometer long second section of pipeline from Atasu to Alashankou started in September 2004 and was completed in December 2005. It includes an oil meterage station at the Alataw Pass. In Alashankou this section is connected with the Alashankou-Dushanzi Crude Oil Pipeline, which runs to the Dushanzi District supplying mainly the Dushanzi refinery. The first oil through this pipeline reached the refinery in August 2006. The third section of the Kazakhstan-China oil pipeline will be Kenkiyak-Kumkol and it is expected to reach full capacity in 2011.
The pipeline is to supply China with Kazakh oil from its oil fields in the Aktyubinsk region as well as from the Kumkol fields of the newly acquired PetroKazakhstan project. Its projected annual capacity is initially 10 million tons, to be expanded to full capacity of 20 million tons. However, it is becoming clear that the pipeline will not be able to operate at capacity without additional oil from non-Chinese controlled sources. The two options are oil from the Kashagan field that is currently being developed and western Siberian oil by connection with Russia’s Omsk-Pavlodar-Shymkent-Türkmenabat pipeline.
Energy-rich Kazakhstan and energy-hungry China seem to be a match made in heaven. China tries to diversify its sources of supply as it becomes increasingly dependent on oil imports. These have rapidly increased from less than 30 percent in 2000 to predicted 50 percent in 2010. In recent years, China has been active through its state-owned oil companies all over the world, not just in Kazakhstan, trying to gain access to oil. However, Kazakhstan is one of the very few sources of oil (Russia being the other important one) that can offer supply by land through a pipeline linking the two countries. This is of strategic importance to China which is forced to import the rest of its oil by tankers. And at present time China’s navy is not at a state that it could assure protection to ships delivering overseas oil, should it ever come to a conflict between China and the United States. An often suggested scenario is that the United States could attempt to energy-starve China with a naval blocade in an event of an escalation of the Taiwan conflict. Therefore, while Kazakhstan’s oil supplies at present and likely in the future will not make up a large share of China’s imports, they are of geostrategical importance.
For Kazakhstan, the oil pipeline to China helps it to diversify its oil exports. Currently, the vast majority of its oil is exported through Russia which has shown that it is not afraid to use its energy resources to exert pressure on its partners overseas. In the future, it’s likely that the majority of Kazakhstan’s oil exports will continue going through Russia. A diversification of its transport options to China and Azerbaijan, however, is an important symbolic step in exerting itself from Russia’s tight grip.
While currently China’s role in Kazakhstan’s energy sector is relatively small compared to that of Russia or Western oil companies, it is safe to assume that it is going to keep on growing. The geographical vicinity of the two countries and the mutual benefit that both countries are set to derive from a common energy policy make this development likely and logical. The question that will be answered in the near future is how the growing influence of China will affect the current status quo in Kazakhstan.
