Kazakhstani expert: Serious struggle for Chinese energy market may start in Central Asia

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“Agreement on Kazakhstani and Turkmenistan's natural gas supplies to China has been coordinated with Russia,” analyst at Institute of Economic Strategies – Central Asia (IES – CA) Aitolkyn Kurmanova told REGNUM corespondent. The expert was commenting on Kazakhstan and China's agreement to construct a section of a gas pipeline through which Turkmenistan has taken an obligation to annually supply 30 bn cubic meters of gas to the Chinese Republic of China, starting in 2009.

According to the expert, the gas issue is one of the priorities in relations between Central Asia and Russia. Especially since internal Russian market demand and the recent rise in Central Asian gas prices are taken into account. “The new transport route is really beneficial to Kazakhstan and other Central Asian countries, not only in terms of diversification of export flows but also in terms of receiving additional investment opportunities from China,” Kurmanova said.

At present, in view of the growing China's demand in natural gas, both Russia and Central Asia, having such an instrument for settling potential controversies as the SCO, can cooperate and supply energy resources to China. “However, in not-so-distant future, a moment may come when a serious competition will unfold in our region for China as main buyer. For it will be ultimately China, not the Central Asian countries, who will live up to its diversification plan. It will have a number of suppliers to actually ensure for itself stability of supplies and flexible price parameters,” Aitolkyn Kurmanova said.

According to some experts, a new pipeline contradicts Gazprom's interests. In particular, according to Antanta Capital analyst Timur Hairullin, “having satisfied part of its demand by Turkmenistan's gas, the Chinese will receive pretty good positions in their negotiations with Gazprom on Altai (project of natural gas pipeline from Russia to China) and may insist on lower gas price.”