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A new pipeline that will feed oil from Kazakhstan to China will be inaugurated on Thursday, marking another step by the Central Asian country towards major oil-producer status.

A new pipeline that will feed oil from Kazakhstan to China will be inaugurated on Thursday, marking another step by the Central Asian country towards major oil-producer status.

Chinese and Kazakh officials together will ceremonially begin the task of filling up the 1,000-km (620-mile) pipeline linking Atasu in central Kazakhstan to Alashanku in western China.

The $ 700-million (588-million-euro) pipeline has been jointly built by China National Petroleum Corporation (CNPC) and the Kazakh state energy company Kazmunaigaz.

It is expected to begin delivering oil from the Kumkol field in central Kazakhstan by the middle of next year, with an initial capacity of 10 million tonnes annually.

But Thursday’s ceremony is also a milestone on the road to a more ambitious goal for which Kazakh authorities have set a 2011 deadline: the extension of the pipeline from Kazakhstan’s core oil fields on the Caspian Sea to Alashanku, in China’s western Xinjiang province, a distance of some 3,000 km (1,850 miles).

Officials also plan to double the capacity by the same date.

The project symbolises Kazakhstan’s rise as an oil producer that adjoins both Europe and Asia and that under President Nursultan Nazarbayev has steadily loosened ties with its Soviet-era master, Moscow.

Nazarbayev’s leadership has set a goal of increasing total oil exports from about 1.2 million barrels a day this year to 3.5 million barrels a day in 2015.

That ambition appears a good fit with China’s voracious appetite for natural resources.

Beijing ‘is particularly interested in Kazakhstan because China is booming and the competition for energy is less than in Europe,’ said the director of Almaty-based consultancy Assessment Risks Group, Dosym Satpayev.

China has steadily been making inroads in Kazakhstan’s oil sector, recently clinching the purchase of the previously Canadian-run independent PetroKazakhstan.

PetroKazakhstan is likely to be a key supplier for the Atasu-Alashanku pipeline, while CNPC reportedly also has been investigating a possible purchase of another Canadian-run Kazakh independent, Nations Energy.

The Russian government, meanwhile, appears relatively unruffled by China’s quest for resources in a part of the world Russia has long considered its sphere of influence. By contrast the Kremlin gave a frosty reception to the inauguration in May of a Western-backed pipeline from the Caspian to Turkey’s Mediterranean coast, the Baku-Tbilisi-Ceyhan pipeline.

This nonchalance may partly be due to the pressure Russia itself is feeling to supply oil direct to China that might fetch a better price elsewhere.

Sparsely populated Kazakhstan is itself not immune to worries about China’s rise, which are thought to have prompted recent legislation allowing the Government to intervene in sales of assets it judges ‘strategic’.

Analysts have noted that the Atasu-Alashanku pipeline has the disadvantage of a single buyer at the receiving end, increasing Beijing’s ability to dictate the purchase price.

But Kazakshtan’s landlocked location makes a difficult balancing act all but unavoidable, a Western oil industry insider observed.

‘Kazakhstan doesn’t have serious problems with Russia at the moment, but the Kazakh leadership understands well that for its energy security it needs alternative routes,’ he said.

Source : www.hindustantimes.com

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