China Pays Dearly for Kazakhstan Oil 03/17, 2006 【NY Times】
19, Mar 2006 08:51
Kazakhstan authorities are also believed to be easing the way for Lukoil of Russia to acquire the other half of Turgai Petroleum, which it now jointly owns with Petrokazakhstan. In addition, a local court recently awarded Lukoil a $200 million judgment against Petrokazakhstan in a dispute over how to share the oil in a common deposit. Both developments are unmistakable signals that Chinese ownership is no guarantee of a smooth ride.
It remains unclear how much of Petrokazakhstan's oil China will be able send through its import pipeline. Also unknown is the profitability of the pipeline itself, which requires the addition of Russian crude from Siberia that has not yet been committed. The Chinese oil company's vice president, Zhou Jiping, was ebullient at the pipeline's opening last December, near the eastern Kazakhstan town of Atasu.
"This is the new Silk Road," Mr. Zhou said, adding that he hoped China would continue to acquire more oil assets in Kazakhstan. Indeed, China is widely believed to be readying a bid for a smaller Canadian-owned oil company, Nations Energy, which produces a third of Petrokazakhstan's output.
"The Chinese are overpaying, but they have a lot of money from exports and they want to spend it on any equity oil they can find," said Robert Ebel, chairman of the energy program at the Center for Strategic and International Studies in Washington, and co-director of its Caspian Sea Oil Study Group.
"Price is less important than reliability and building good will in the Kazakhstani government," Mr. Kellner of the Brussels university added.
If it reaches its full capacity, the pipeline will provide 400,000 barrels a day, about 8 percent of China's current energy needs, the pipeline's builders said at the opening.
"For the Chinese," Mr. Kellner said, "ensuring friendly relations with the Kazakh leadership is just as important as getting the oil."
China's leadership has viewed with alarm the creation after Sept. 11, 2001, of American military bases in Central Asia — which China considers its backyard — and has tried to woo Kazakhstan's longtime president, Nursultan Nazarbayev, away from closer relations with the United States, he said.
At the same time, Russia continues to have an influence.
When Mr. Nazarbayev delivered a major policy speech on March 1, he listed "increasing integration with Russia" as Kazakhstan's first foreign priority and "improving cooperation" with China as his second. Maintaining a "long-term, stable partnership" with the United States came in third place.
But beyond investments in the rich but challenging Caspian Sea oil deposits that are expected to turn Kazakhstan into one of the world's top five exporters of crude in a decade, the United States has less to offer Kazakhstan than China does.
Even though most Kazakhs view China with a mixture of fear and suspicion, Mr. Nazarbayev approved the Chinese pipeline because it offered an extra oil export route to reduce his landlocked country's dependence on Russia, Azerbaijan and Turkey. Eventually, a sixth of Kazakhstan's total production could flow to China.
The risks inherent in getting Kazakhstan's oil to its main market, Western Europe, were highlighted in 2005 when Russia blocked the expansion of a Western-owned pipeline going from the North Caspian shore to the Black Sea in Russia; the line was expected to carry a major portion of Kazakhstani oil. As a result, Tengiz, Kazakhstan's second-largest field, operated by ChevronTexaco, has had to plan for more costly transportation by rail.