Tuesday, 6 September 2011
Central Asia–China pipeline to double capacity
The 7,000km pipeline begins in Turkmenistan, where it is plugged into the country's natural gas network, and runs through Uzbekistan and Kazakhstan before reaching Xinjiang. The project was put together in a remarkably short time, with construction beginning in August 2007 and the pipeline coming onstream in December 2009. Most of the construction was undertaken by China's state energy company China National Petroleum Corp (CNPC), working alongside local partners.
The pipeline was the first link to take significant quantities of Central Asian gas outside the region without crossing Russian soil. Its completion was viewed as a major coup for Beijing, which has been rapidly expanding its economic and political presence in Central Asia over the past few years, undercutting Moscow's traditional dominance.
The pipeline's current export capacity is around 30 billion cubic metres (bcm) per year, but since the end of 2009 it has only supplied around 13.68bcm. CNPC's decision to expand the pipeline's capacity to 55-60bcm in four years is therefore a remarkable statement of confidence in China's growing appetite for gas, as well as the ability of Turkmenistan to bring enough gas fields online in time.
Chinese natural gas demand is expected to rise by 10 per cent per year, but supplies from Central Asia account for only a portion of that. If a deal is finally hammered out with Russia's Gazprom over supplying Siberian gas to China's east, the impetus for importing even more Central Asian gas will decrease further.
Turkmenistan is also making promises to a whole range of potential consumers, which it may not be able to deliver on in good time. It has pledged increased supplies to Iran and Russia, and has repeatedly expressed interest in sending gas westward to Europe.
The government has announced plans to increase gas output to 125bcm per year by 2015, up from a peak of around 70bcm in 2008. Work being conducted on newly discovered gas fields is expected to help Turkmenistan to meet this production target, but these technically challenging fields will take some time to bring onstream, and increasing production still further to fill an expanded pipeline to China looks optimistic.
If the plan goes ahead, however, it would tilt the region's energy profile even further eastwards and give Beijing another victory in the race for Central Asian resources.
Sources: Platts, Central Asia Newswire, Oil & Gas Eurasia
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