New branch of Central Asia-China gas pipeline comes online

China National Petroleum Corporation (CNPC) reported in early June that a third branch of the Central Asia–China gas pipeline, also known as line C, had been inaugurated on 31 May, with the first volumes of Turkmen gas now following a new export route across Uzbekistan to the Chinese autonomous region of Xinjiang.

The 1,830km pipeline runs parallel with lines A and B, starting at Gedaim at the Turkmen-Uzbek border and entering Chinese territory at Khorgos. Once in China, it interconnects with the third west-east gas pipeline, which was built by Beijing to take imported natural gas deeper into the country’s heartland and to the east coast where the bulk of its industrial production takes place. Construction of this additional line was started in September 2012 and welding was completed, as initially foreseen, at the end of last year.

CNPC expects that, on completion of all supporting facilities by early 2016, line C will reach its designed annual transit capacity of 25 billion cubic metres. This means that, if all goes to plan, the Central Asia–China gas pipeline will be able to deliver on an annual basis up to 55bcm of Turkmenistan-produced natural gas to Chinese customers. This will represent roughly 20% of China’s domestic gas consumption.

With this in mind, the authorities should proceed to a massive substitution of gas for coal. Reducing coal consumption by 73 million tons a year may allow China to cut its carbon dioxide and sulphur dioxide emissions by 78 million tons and 1.21 million tons respectively. If Turkmenistan delivers on its November 2011 promise to supply as much as 65bcm of gas a year, millions of Chinese will see clearer skies.

For Turkmenistan, the expansion of the Central Asia–China gas pipeline system means that its revenues from the lucrative energy sector will remain stable in decades to come. Unlike Kyrgyzstan and Tajikistan, whose political stability has been compromised by high levels of poverty and the lack of economic opportunities, Turkmenistan has all it needs to remain a deeply autocratic regime with enough gas money to silence domestic critics and secure obedience from ordinary Turkmens.

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© 2014 Menas Associates

Central Asia–China pipeline to double capacity

The Central Asia-China gas pipeline, running from Turkmenistan to the western Chinese region of Xinjiang, is to double in capacity by 2015. The pipeline has yet to fill its existing capacity, so such a dramatic expansion reflects either cast-iron confidence or over-ambitious expectations for Chinese gas demand and Turkmenistan's production.

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

For more news and expert analysis about the Caspian region, please see Caspian Focus.