Oil Report

China extends influence into C.Asia with pipeline

* China to open new major gas pipeline from Central Asia

* Hu seeks closer ties with Central Asian leaders

* Central Asia welcomes China’s growing clout

ASHGABAT, Dec 14 (Reuters) - China extended its reach into Central Asia’s vast natural resources on Monday as Chinese leader Hu Jintao prepared to open a new pipeline connecting a gas field in ex-Soviet Turkmenistan with China’s restive Xinjiang region.

The leaders of Kazakhstan, Uzbekistan and Turkmenistan joined Hu in a remote location near the Turkmen-Uzbek border to commission the 1,833-kilometre (1,139-mile) pipeline that snakes across Central Asia via their countries.

The pipeline, starting near a Chinese-developed gas field in eastern Turkmenistan, is due to reach full annual capacity of 40 billion cubic metres by 2012-13 and help Beijing propwl its explosive economic growth.

China’s aggressive foray into Central Asia represents a snub to Russia which still sees the Muslim region as part of its sphere of influence. It is also a worry for Europe, which sees the energy-rich region as an alternative new supplier of gas.

Speaking on the eve of the ceremony, Hu described the opening of the new pipeline as a “momentous event”.

“It will benefit all countries in the region,” he said. “The whole world is watching us right now.”

Lying on some of the world’s biggest oil, gas and metals reserves, Central Asia is at the centre of a geopolitical tug-of-war between Russia, China and the West, all seeking to grab a share of its untapped riches.

The pipeline is a big win for China since it is Central Asia’s biggest export route that reaches markets outside Russia and bypasses it territory.

Years of quiet diplomatic manoeuvring have helped China step up its presence in the region by handing out billions of dollars in loans, snapping up energy assets and building an oil pipeline from Kazakhstan. [ID:nGEE5B91CK]

Hu’s visit also acted as a rare unifying force for Central Asian leaders who, ridden by internal rivalries and rows over cross-border use of natural resources, rarely assemble to discuss regional cooperation.

They have in the past tentatively attended Russia-dominated regional summits, but their willingness to travel to a remote location underscores the extent to which want to forge closer ties with their giant eastern neighbour.


Long wary of China’s growing economic and political clout, Central Asian leaders have this time brushed aside their concerns and welcomed Beijing’s push into their region.

“This project has not only commercial or economic value. It is also political,” President Kurbanguly Berdymukhamedov told Hu on Sunday. “China, through its wise and farsighted policy has become one of the key guarantors of global security.” [ID:nLDE5BC0BA]

Russia has ruled Central Asia, a thinly populated region of steppes and mountains, for centuries, first during tsarist-era conquests and later under 70 years of Soviet dominance.

After the Soviet fall, Central Asia’s mineral riches and strategic proximity to Afghanistan and Iran have attracted attention and prompted the West and China to seek closer ties with a region now run by Soviet-style authoritarian leaders.

Russia's Gazprom GAZP.MM stopped buying Turkmen gas in April after a pipeline explosion sparked a broader diplomatic row over gas. The move has cost Turkmenistan about $1 billion a month and prompted it to form closer links with other nations.

As diplomacy heats up, Russian President Dmitry Medvedev is also due to travel to Turkmenistan this month for energy talks. (Writing by Maria Golovnina; Editing by Ron Popeski)