China accelerating work on Central Asia pipeline

Paying 30% more for Turkmen gas than from Russia

SINGAPORE/ ASHGABAT:

China is accelerating the building of a long-delayed Central Asian pipeline to source gas from Turkmenistan even as Russia pushes its own new Siberian connection, as Beijing juggles its energy security needs with diplomatic priorities.

Beijing is keen to bolster Central Asia ties under its Belt and Road Initiative, but nearly a decade after construction began, the “Line D” project has been hobbled by complex price talks and the technical hurdles of laying a pipeline crossing another three central Asian nations, Chinese state oil officials said.

But Moscow’s recent push to land its second Siberia pipeline connection with China, the Power of Siberia 2, to make up for shrunken sales in Europe due to the Ukraine crisis, provides Beijing a lever to advance the central Asian project, according to Chinese oil officials and industry consultants.

“Central Asian pipelines are considered a cornerstone investment in China’s energy and geopolitical space. It’s a supply channel with strategic value that supersedes commercial concerns,” a state-oil official familiar with China National Petroleum Corp’s (CNPC) global strategy told Reuters.

China may eventually seal both deals to feed its massive long-term gas needs, but is prioritising Turkmenistan, industry officials said, as Beijing has long seen Central Asia as a frontier to expand trade, secure energy and maintain stability in its once-restive western Xinjiang region.

Combined, multi-year contracts worth tens of billions of dollars to bring gas via both pipelines would meet 20% of China’s current demand. The pipelines are key to Beijing’s goal of using gas as a bridge fuel towards its carbon neutrality targets and also helping to shield it from the volatile tanker-carried liquefied natural gas (LNG) market.

Estimated in 2014 to cost $6.7 billion, Line D would carry 30 billion cubic meters of gas a year.

Published in The Express Tribune, May 25^th, 2023.

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