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The opening of a new pipeline Thursday to carry oil to China from Kazakhstan in Central Asia is a small but important step in Beijing s effort to reduce its reliance on Middle East supplies at a time when the country s energy needs are soaring.

The opening of a new pipeline Thursday to carry oil to China from Kazakhstan in Central Asia is a small but important step in Beijing’s effort to reduce its reliance on Middle East supplies at a time when the country’s energy needs are soaring, oil analysts said.

The 1,000-kilometer-long (625-mile-long) pipeline is to carry 190,000 barrels of oil a day, an amount that could double in coming years.

‘The new Kazakh pipeline is small but it signals a real Chinese interest in trying to move away from Middle East oil,’ said Kuen Woon Paik, a researcher at Chatham House, a London think tank.

Chinese oil imports have soared in recent years as the demands of its booming economy outstripped production at domestic fields that once supplied nearly all of the country’s needs.

But Beijing worries about possible threats to its supplies of Middle East oil, which have to make a lengthy journey by sea, passing through Southeast Asia’s strategic Strait of Malacca.

Beijing also is negotiating with Russia over the construction of a proposed pipeline to deliver Siberian oil. That line, to be completed as early as 2008, would carry about 380,000 barrels per day.

‘Both the Kazakh and Russian lines will help China get away from dependence on Middle East oil, said Gavin Thompson, who works in Beijing for the British oil consulting firm Wood Mackenzie.

The new pipeline from Kazakhstan stretches from the Kazakh town of Atasu through the Altaw Pass in China’s desert northwest.

Estimates of China’s current oil imports range from 2.5 million to 3 million barrels per day, most of it from the Middle East. Foreign analysts expect that figure to rise to 5 to 10 million barrels by 2010.

Most of China’s oil imports come from the Persian Gulf and Africa.

Chinese officials have made no secret of their concern over the potential for oil supply disruption in the Strait of Malacca, the funnel for 80 percent of Chinese imports.

President Hu Jintao said in November, 2003, that China has to change its strategy because ‘some big countries attempted to control the transportation channel at Malacca,’ the official Xinhua News Agency reported.

Xinhua did not elaborate, but analysts say China is uneasy about the U.S. military presence in East Asia and Washington’s ability to enforce a blockade of the strait.

The United States denies it has any intention of blocking Chinese access to the strait. It says the key threat comes from pirates and other rogue elements disrupting commercial shipping.

Despite the Kazakh and Russian pipelines, most oil analysts believe China will continue to rely heavily on Middle Eastern crude.

‘The dependence of China on Middle Eastern crude is very significant and will continue to be so,’ said Paik. ‘There is nothing it can do to change this.’

A recent analysis by the Chinese Academy of Social Sciences, the government’s main think tank, reached the same conclusion.

‘It is an unarguable fact that China’s dependence on Middle East oil is increasing. And this reliance will continue,’ said its report. ‘The Middle East will be the most important supply source of international oil for China.’

Source : www.businessweek.com

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