Growing links in energy and geopolitics between China, Russia, Central Asia and the Gulf

Mehmet Öğütçü and Xin Ma [1]

Overview

China’s dependency on imported energy has surged in recent years and is expected to grow at a similar or increasing rate in the coming decades, driven by an unprecedented industrialization mobilization and urbanization process. As a result, the Chinese leadership feels increasingly insecure and vulnerable as greater dependency has exposed the country to the risks of global supply disruptions, chronic instability in energy exporting regions, and the vagaries of global energy geopolitics. As access to sustainable and secure energy at a reasonable cost is perceived by the leadership as critical for China’s continued development, political endurance, and social stability, energy issue has become a matter of “high politics” of national security and no longer just the “low politics” of domestic energy policy[2].

Securing energy resources is no doubt a highly political matter. This was the case for Japan before the Second World War. It is also the case for China today with its growing energy demand. Just like other governments with a long history of central planning economy, the Chinese government believes that security is too important to be left entirely to the markets. Instead, it combines government approaches with market measures to secure the needed energy as demonstrated by the ambitious shopping behavior of the Chinese national oil companies and the high profile energy diplomacy, conducted by the government. This is undoubtedly going to have a profound impact on the international market, particularly on the major energy exporters, namely the Gulf, the CIS, and Africa.

This paper attempts to analyse the expanding energy linkages of China, one of the most dynamic major consumers, with the Middle East, a leading petroleum producer and the CIS, a core non-OPEC emerging producer, not only because they are well established oil exporting regions, but also because of their geopolitical relevance to China as key players in a possible energy corridor linking China with the Gulf at some point in the future. The paper concludes that the economics and geopolitics of energy supply for China dictate different approaches to each of these regions, with the CIS territory ensuring its energy to be transported across the ocean where China could be vulnerable to potential maritime disruption in the event of serious international disputes, and with the Gulf offering more flexible commercial arrangements.

China takes different economic and geopolitical approaches towards Russia and the Central Asian/Caspian producers. Compared to Russia, seen as relatively unreliable, Central Asian hydrocarbon resources seem more promising and feasible for China, although funding problems and political calculations plaguing all pipeline projects offer no exception[3] Furthermore, China’s extending its Central Asian land routes from Kazakhstan and Turkmenistan and then down to northern Iran is seen as a visionary Sino-Arabic oil passage to the Gulf ports[4]. China is also willing to join the northern line transportation for its expected stake in Siberia and the Russian Far East, by some oil swap options between China, Kazakhstan and Russia. Similar natural gas projects are under work or consideration linking China to Central Asia and Russia.

These corridors could eventually position the Middle Kingdom at the centre of a "Pan-Asian Global Energy Bridge" that will connect existing and potential suppliers to Asia (i.e., the Gulf, Central Asia, and Russia) with the key consumers (China, Japan and Korea). If successfully implemented, this will not only largely improve the energy security of China, but also will enhance Beijing’s geopolitical influence in this geography.

As the international energy sector has undergone significant changes since the beginning of this century, due to the emergence of new players and the changing of dynamics among all players, the resultant energy scene requires adjustments to make room for new players in the marketplace and develop effective, “win-win”, collaborative mechanisms to promote confidence. Energy security concerns need to be addressed from the standpoints of both consumers and producers. Otherwise, geopolitical rivalry and tough competition for scarce resources will likely intensify, leading to “zero-sum” confrontations.

Changing dynamics in international petroleum sector

The pattern of international petroleum sector is under serious transformation due to the emergence of new powers, such as China, or old players being equipped with new powers, such as Russia, Central Asian countries and the Gulf countries, and an increasing concern of energy security from both consumer and producer perspective. The changing nature of the international petroleum market thus requires new rebalanced mechanisms, and new forms of partnerships among players.[5] These major consumers and producers are interacting with each other, taking active measures to conduct energy diplomacy, establishing new strategic partnerships with a view to changing rules in a way that will better serve their national interests.

The profound changes in world energy, still underway, could be summed up as follows:

First, the increased international petroleum prices have, together with many other factors, shifted power significantly to oil producing countries, especially a few large ones, where the majority of remaining reserves are located, such as the Gulf, Russia, and Central Asia[6]. This power, coupled with the huge financial assets accumulated by those producers in a high price environment, has fuelled the international ambitions of these countries to seek changing or reshaping the traditional rules of the game for the benefit of their national interests.[7] Some of them, such as Russia, not only host large share of world petroleum reserves, but also has the political will to use energy as an instrument to advance its economic and political interests.[8] Aware of their increasing power, many of the resource-rich countries have either re-nationalised their oil industries or established strategic control through further transfer of power into the hands of governments.[9]

...

Full-text of the paper is available, click here. (pdf, 42 pages)

.

The Reflection Cafe thanks to the authors for their permission to re-publish this article in the Cafe. The article has been published earlier in Insight Turkey:

http://www.insightturkey.com/currentissue.htm / http://www.insightturkey.com/is0903.htm

[1] This paper represents the authors’ personal views and not those of any organisation they are associated with.

Mehmet Ögütçü, former Turkish diplomat, senior OECD/IEA staff in Paris, an International Board member of the Windsor Energy Group, and currently with BG Group in London. He is the author of numerous books including, inter alia, “China’s Quest World-wide for Energy Security” (IEA, 2000), “Eurasian Energy Prospects and Politics: Need for a Western Strategy” (Energy Charter Treaty, 1994), “Asian Energy Security Concerns and Geopolitical Implications for the Middle East, the Indian Ocean and the Central Asia” (IDSA New Delhi: February 2003), “China’s Regional Development and FDI”, (OECD,2004), “International Investment for Development” (OECD, 2005), “Does Our Future Lay with Asia” (1998, Milliyet Publishing) and “2023 Turkey Roadmap” (Etkilesim Publishing, 2007). He can be contacted at ogutcudunya@yahoo.co.uk

Xin Ma, a researcher and doctoral candidate at Centre for Energy, Petroleum and Mineral Law and Policy at the University of Dundee, has a Master degree on management engineering at University of Petroleum (China). She spent four years working at PetroChina Ltd. The focus of her current research is National Oil Company reforms and the impact to commercial efficiency. She can be contacted at x.ma@dundee.ac.uk

[2] China's quest for energy security since its becoming a net crude importer in 1993 and dethroning Japan as the world’s second largest consumer of oil a decade later has driven the Middle Kingdom to the world’s principal hydrocarbon producing and exporting regions.

[3] Petroconsultants, October 1998, p.51. G. Kemp, R. Harkavy, Strategic Geography and the Changing Middle East (Washington, DC: Carnegie Endowment for International Peace, 1997), p. 131.

[4] Xiaojie Xu, “The Oil and Gas Links between Central Asia and China: A Geopolitical Perspective”, OPEC Review, Vol. XXIII No.1, March 1999, p.48.

[5] Ernst&Young (2007). Partnership in the Oil and Gas Sector: New Models, New Agendas 1-19. P3 Mandil, C. (2007). The Energy Future International Oil and Gas: Financial Review 2007. M. Crisell, Euromoney International Investor PLC 1-3. P1

[6] Despite four years of high oil prices, market tightness is likely to increase beyond 2010 as global oil demand will grow from an annual 2 percent average over the next five years to 2.2 percent. The increase will largely be caused by faster growth in Asia and the Middle East. At the same time, non-OPEC supply will decrease, partly because of delays on major oil projects but also because supplies are nearing a peak. While biofuel production is expected to double over the next few years, it will still only account for 2 percent of global oil supplies by 2012.

[7] Mandil, C. (2007). The Energy Future International Oil and Gas: Financial Review 2007. M. Crisell, Euromoney International Investor PLC 1-3.P1

[8] Lo, B. and A. Rothman (2006). China and Russia: Common Interests, Contrasting Perceptions Asia Pacific Strategy, Asian Geopolitics Special Report, CLSA Asia-Pacific Markets: 1-31.P13, 21

[9] See “The new seven sisters: oil and gas giants that dwarf the west’s top producers”, Financial Times, March 12, 2007. A recent study measuring the shift in power in global energy markets revealed that seven major state controlled energy corporations from non-OECD countries (i.e. Saudi Aramco, Gazprom, PDVSA, China’s CNPC, Iran’s NIOC, Petrobras of Brazil and Petronas of Malaysia) presently control over 30 percent of global oil and gas production and over 30 percent of reserves, while the original seven (now four) OECD-based energy blue chips which have dominated global energy markets since World War II (i.e. ExxonMobil, BP, Chevron, Shell) now control just 10 percent of production and 3 percent of reserves.

.

Great Power Stakes in Central Asia

Robert Legvold, Columbia University

.

More than a decade after the fall, the great powers, including Russia, remain adrift when dealing with the immense space that was the Soviet Union. For much of this time, their confusion and indifference went largely unnoticed. If they miscast or obscured the challenges raised by the large floating chunks of a now defunct empire, the oversight seemed less blameworthy, given the remoteness, self-absorption, and weakness of so many of these unexpected new states. Then came September 11, 2001, and, in the mobilization that followed, these distant parts overnight became a key theater in the “twenty-first century’s first global war.” Central Asia, in particular, ceased to be a collection of forgettable “-stans,” and emerged as an integral piece in the war on Al Qaeda and the Taliban. In its wake the United States and other NATO members were suddenly a military presence in three of the five Central Asian states, and everyone, beginning with Moscow and Beijing, understood that the world had changed.

China, Japan, Europe, Russia, and the United States had from the start known that the post-Soviet space would be a more complicated— albeit less intimidating—affair than the Soviet Union, a single, united superpower...

.
Full-text available, click here.

.

Thinking Strategically: The Major Powers, Kazakhstan, and the Central Asian Nexus, Edited by Robert Legvold (For Russian version, click here)

.

Middle East, Central Asia, Russia, Balkans

.
Arab Nationalism in the Twentieth Century: From Triumph to Despair, Adeed Dawisha
Is Democracy in the Middle East a Pipedream?, Fawaz Gerges
Promoting Middle East Democracy: Is the US on the Right Track,Thomas Carothers & Marina Ottaway
New Ambitions New Anomalies: NATO and the Broader Middle East, Berdal Aral
The Arab 'Street' and the Middle East's Democracy Deficit, Dale F. Eickelman
The U.S. & the Middle East Three Years after 9/11, John L. Esposito
Grand Middle East Initiative or Bringing Democracy to Muslim Countries, A. Nuri Yurdusev
Power and Identity in Flux: American Foreign Policy Toward the Middle East, Engin I. Erdem
Fallout from the War on Terror, J. Alexander Thier
Iraq: the Wrong War, Mary Caldor
Arab Studies: A Critical Review , CCAS-Georgetown Univ.
The Rejuvenation of Classical Orientalism in the US: Patriotic Academics ,As'ad Abukhalil
The New Ivory Towers: Think Tanks, Strategic Studies and "Counterrealism", Leila Hudson
Islam, Islam-the West Relations, The Reflection Café
Breaking the Vicious Circle of Anti-Americanism and Islamophobia , Louay Safi
Political Reform in the Arab World: Reality and Illusions ,The Carneige Endowment
War and Peace in the Middle East: An Interview with Phyllis Bennis ,Political Affairs
Turks may look back with anger at Israel, Bulent Aras
Israel and Turkey: Current Relations and Strategic Interests , BICOM
From Rapprochement to Strategic Partnership: Turkish-Israeli Relations in the 1990s, Engin I. Erdem
Conflict Resolution in the Neighbourhood: Comparing the Role of the EU in the Turkish-Kurdish and Israeli-Palestinian Conflicts, Nathalie Tocci
Engage, Don't Isolate, Iran, Robert Hunter
.
The Impact of Current Events in Uzbekistan, Martha Brill Olcott
Caspian Basin Leaders Hail Opening of Baku-Tbilisi-Ceyhan Pipeline, EURASIANET
Central Asian Gateway Kyrgyzstan: Revolution or Not?,Yasar Sari & Sureyya Yigit
Kyrgyzstan's "Tulip Revolution", Martha Brill Olcott
Violence in Uzbekistan and the Role of the United States, Yasar Sari & Sureyya Yigit
Uzbekistan's Tipping Point: The Violence in Andijan and What Comes Next ,Martha Brill Olcott
Institutional and Political Challenges and Opportunities for Integration in Central Asia, Central Asian Gateway Forum
Ethnic Conflicts in the Boundary Regions: Barrier for Central Asia Integration, Mingul Seitkazieva & Davlatbek Aminov
Toward the Central Asian Nuclear-Weapon-Free Zone, Engin I. Erdem
Central Asia in the Global Economy, S.Frederick Starr
The Concept of Eurasia and Turkey's Regional Strategies, Ruben Safrastyan
.
Russia's Future Foreign Policy: Pragmatism in Motion, Yevgeny Bendersky
Russia in Focus
Alice-in-Wonderland Russia, Artemi Troitsky
.
Bosnia: Post-Industrial Society And The Authoritarian Temptation ,ESI
The Future of Kosovo: Towards A Kosovo Development Plan, ESI
.

Violence in Uzbekistan and the Role of the United States

.

Yasar Sari, University of Virginia
Sureyya Yigit, Cambridge University
The Journal of Turkish Weekly, May 19 2005

.

The recent brutal killings in Uzbekistan have forced people all over the world to focus their eyes on Central Asia once more. In the media much focus was laid upon what the original dispute was, how events developed and the nature of the governmental forces response. Whilst these are all newsworthy issues our intention is to look at the role of the United States and other regional powers impact and influence over this tragedy.

.

Firstly Uzbekistan is a double-landlocked (meaning that even all the neighboring countries have no coastline) state in the middle of Central Asia, sharing a border with Afghanistan among others. Since its independence in 1991 it has been ruled by its old Communist Party boss Islam Karimov.

.

Being new to international politics Karimov strived to move out of the orbit of the new Russian Federation and made approaches to Turkey and the United States. Whilst Turkey responded generously and warmly extending export credits, investing heavily and opening schools and granting scholarships, the Turkish model of a secular democracy was not to his liking. Relations soured and never regained their initial zenith.

.

As for the United States, the period before 9-11 consisted of a lack of attention directed towards Uzbekistan and the region in general. The State Department criticised the lack of progress in democratization, the slow moves toward a free and open economy and increasing human rights abuses. In earnest Washington was not very interested in this part of Eurasia; it had other concerns in the post-cold war world. All this came tumbling down on 9-11. The identification of Al Qaeda as being responsible for the attacks and the Afghan Taliban regime providing support forced the United States to engage in Central Asia.

...

For the full-text of the article, please click the title.

.

Kyrgyzstan: Revolution or Not?

.

Sureyya Yigit (Cambridge Univ.) - Yasar Sari (Univ. of Virginia)
Open Democracy, April 4 2005

Two scholars draw on experiences in Osh, Jalalabad and Bishkek to decipher central Asia’s first popular uprising

Why did Askar Akayev’s almost fifteen-year rule of Kyrgyzstan, formally concluded on 4 April with his resignation, end in the way it did? Was the people’s protest essentially negative or does it represent a new democratic wave that will impact on the country’s central Asian neighbours?

To answer these questions requires an assessment of what makes Kyrgyzstan politically distinctive within central Asia, as well as an account of events across the country in the days following the second round of parliamentary elections on 15 March 2005.

The Kyrgyz uprising began with protests in the southern cities of Jalalabad and Osh against the official announcement of the election results. These meetings initially focused on the question of why pro-government candidates defeated in the first round of elections were victors in the second, which people attributed to electoral malpractice and bribery.

For two weeks, crowds of angry people stood on the main square in front of government buildings in the two cities. On 18 March several protestors in Osh were beaten and injured in attacks by soldiers and special police forces. They were not cowed, but split into groups of 100-200 people who variously went on to storm almost all administrative buildings – the regional and city administration, the police and security service headquarters, and the prosecutor’s office. Many others roamed the streets, wielding rubber batons they had seized from the militia, and blocking traffic. They said they would unblock the traffic only when state television in Bishkek broadcast a report about events in the south.

The state was not listening. Asel Srazhidinova, from Osh in southern Kyrgyzstan, an applicant to the OSCE Academy in Bishkek wrote: “Some foreign mass media are exaggerating but government media is oversimplifying. The government is making every effort to block information about the protests.”

Sanjar Alimjanov, an Uzbek from a village in the Osh region, says that at this stage post-election anger fused with concerns about their poverty, harvest failures, the high cost of diesel and fertilisers, and the government’s lack of care for their plight. Many protestors came to focus on a single goal: the overthrow of Kyrgyzstan’s president, Askar Akayev, and his government.

Askar Akayev revealed his weakness by organising a pro-government demonstration meeting in Alatoo square, central Bishkek. Samara Turdalieva, from Jalalabad, says that its main goal was to declare to the world’s press that people in northern Kyrgyzstan support Akayev. Students and doctors were told that failure to attend would result in their being expelled or fired. Samara says: “There were lots of people just to show the mass. It is so artificial.” It was one of the regime’s final errors before it was toppled in a popular uprising that, moving from Osh and Jalalabad to Bishkek, involved only a few thousand active protestors.

In Osh and Jalalabad, people targeted government buildings, whereas in Bishkek they also looted large supermarkets and shopping centres (some of them owned by Akayev’s family and close associates). Demonstrators in both regions were clearly angry with extreme inequalities of wealth as well as with an authoritarian government...

.

Full-text available, click the title.

.