ROMANIA: Competition over Energy

The competition over energy resources has reached very high levels today, with the outlook being extremely clear. This competition will evolve extremely dynamically, entailing a geopolitical reshuffling at global level and having a remarkable impact on the international order. First of all this is about the emerging economies’ increasingly hard to quench thirst, emerging economies from whose ranks China and India, which total over a third of the world’s population, indisputably stand out. Secondly, it is increasingly obvious that this competition over energy resources has become the field of a particular geopolitical dynamic. Namely, the states that are looking for energy resources are subordinating their foreign policy goals to that purpose. Thirdly, an increasingly frequent phenomenon consists of using energy resources as a foreign policy vector precisely in order to capitalize on the global competition in this domain.

Russia is an example in that regard, a country that covers an important percentage of the European energy needs and that uses that fact in order to promote its own interests both in what concerns the end-users and the transit states. Another example consists of the states that have a deficit of energy resources – such as EU and China – and that tend to diversify their sources of supply in order to avoid remaining dependent exclusive on a single one. Last but not least, since energy represents both an element of economic development and a power status in the world hierarchy, ideas on assuring energy security are increasingly voiced, with the long-term strategic positioning complying with these realities.

Here is why a diplomatic tour such as the one conducted by China’s President Hu Jintao in three Central Asian states (Kazakhstan, Turkmenistan and Uzbekistan) drew the attention of those that keep a close eye on the world energy file. Especially since the four Heads of State were due to inaugurate yesterday the construction of a 1,833 km pipeline that will supply Turkmen natural gas to China. The pipeline starts from the Turkmenistan-Uzbekistan border, crosses Uzbekistan and Kazakhstan and ends up in the Xinjiang province in north-west China. This pipeline is planned to have a throughput of approximately 40 billion cubic meters of natural gas, so that Turkmenistan will have a significant counter-weight to the exclusivity that Russia holds as an outlet for its energy exports. One of the pipeline’s two sections has been completed, with the other set to become operational next year.

In fact, this diplomatic tour is not drawing attention only because of the international competition in the energy domain. Its backdrop is interesting to say the least from another perspective too. As known, Russia bought Turkmen natural gas in immense quantities, namely approximately 50 billion cubic meters annually. But in April this year the Russian natural gas imports were ceased as a consequence of a pricing dispute, with some sources stating that Turkmenistan was losing approximately USD 1 bln each month because of the price level. Russian-Turkmen negotiations on resuming the deliveries have been scheduled but have not come to a conclusion. Meanwhile, China helped out the former Soviet state with a USD 3 bln loan in order for it to develop the South Iolotan natural gas field, one of the richest gas fields in the world. China also offered important loans to other regional states, such as USD 10 bln to Kazakhstan, and it also bought shares within MagistuMunaiGas, Kazakhstan’s oil producing company. Likewise, it is worth mentioning that the trade between China and Turkmenistan grew threefold in the last year, totalling USD 17 bln, while the trade between China and Uzbekistan doubled during the same period. It’s an offensive that cannot be ignored at all.

A highly promising economic and political trend is set to be sanctioned on the occasion of the four Heads of State’s meeting in Turkmenistan’s capital Ashgabat. At heart are the three Central Asian states’ ties with China, with the Turkmen and probably Uzbek natural gas as well as the Kazakh oil gaining a new outlet represented by China’s insatiable energy market. Basically, apart from inaugurating the China – Central Asia pipeline, at the invitation of Turkmen President Gurbanguly Berdymukhamedov the other three Heads of State – Chinese President Hu, Kazakh President Nursultan Nazarbayev and Uzbek President Karimov – will hold talks in the Turkmen capital on very important issues: international politics, issues having to do with strengthening international peace and stability, various aspects concerning the economic, cultural and humanitarian development in the region, high-priority regional and inter-regional projects (according to the news agencies). Of course, the energy partnership will be a main talking point, considering the symbolical inauguration of the new energy route. Within this dossier the Turkmen initiative on international security guarantees for transnational pipelines stands out, with the four states being the co-authors of a UNSC resolution titled ‘Reliable and Stable Transit of Energy and Its Role in Ensuring Sustainable Development and International Cooperation.’

It also has to be underlined that an agreement on developing the strategic partnership between the two states was signed during the visit to Kazakhstan, an agreement that provisions the deepening of cooperation in the mining domain and the promotion of bilateral ties in non-energy domains such as the financial and cultural ones. The number of Kazakh students that study in China is set to double (200 persons).

The Russian news agency pointed out even before the start of the Chinese President’s visit in Central Asia that Gazprom and Uztransgaz have signed an agreement on supplementing the deliveries of Uzbek natural gas in 2010. In 2005 the two companies had signed an agreement on delivering Turkmen natural gas through Uzbekistan from 2006 to 2010. The news item points out that Russia is not at all passive when it comes to the destination of the Turkmen natural gas and is trying to maintain its position as the main regional player.

President Hu’s tour through the Central Asian states basically shows both the importance and harshness of the competition over energy resources on the international stage and Beijing’s incontestable dynamism in this region, a region that has an obvious economic and political significance. In the same manner, this diplomatic tour foreshadows a strengthening of China’s multilateral role in defining the regional trends.

by Mihai Hareshan
Source: Nine o'Clock