China's Hunger For Energy Resources Is What's Driving The Belt And Road

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A general view of the Atasu control station of the Atasu-Alashenkou pipeline in Atasu. (AP Photo)

While it’s not as symbolic as a Chinese flag-brandishing freight train rolling into a European port for the first time or as sexy as transforming a squalid stretch of desert into a “new Dubai,” or building a Port City on reclaimed land, or high-speed trains between iconic European capitals, or as exhilarating as the futuristic talk of hyperloops, “flying trains,” or even as flashy as optic fiber on the Karakoram Highway, the most important driver behind the Belt and Road Initiative (BRI) is far more pragmatic: energy procurement.

On October 15th, Kazakhstan will begin shipping natural gas to China via a set of pipelines that run from the frontiers of Uzbekistan to Khorgos, a massive development zone that spews over the Chinese border. The one-year deal was signed on October 2nd between KazTransGas JSC, Kazakhstan’s largest gas company, and PetroChina Company Limited, and should see five billion cubic meters of Kazakh gas flowing into far western China for a prospective take in the ballpark of $1 billion.

Kazakhstan has the world’s 15th largest known reserves of natural gas, and is currently exporting 13.7 bcm of it abroad. This new deal with China will see this number upped by over one-third.

Before now, Kazakhstan hasn’t been shipping any of its own gas to China, but plans to eventually boost exports and transit of it to its eastern neighbor to 100 Bcm per year in the future — claiming that it has the capacity to ship 10 Bcm annually to China on its own.

This new source of gas for China is slated to come from fields in the west of Kazakhstan and flow through the Beineu-Bozoi-Shymkent pipeline before connecting in with the Kazakhstan-China pipeline, which came out of a 2007 deal between Kazakhstan’s everlasting president, Nursultan Nazarbayev, and Chinese President Hu Jintao and cost $7.5 billion to construct.

However, there are potential geo-economic ramifications to this new deal. Turkmenistan, Uzbekistan, and Russia are currently already pipelining their own natural gas to China and maintain long-term contracts to continue doing so. However, China’s appetite for this energy source is growing at an impressive clip, and is expected to rise 8.1% annually until 2030, which is far above the 2.1% global annual growth rate.

If we looked at the entire BRI in terms of China increasing, bolstering, and securing their energy supply lines alone — without any of the rhetoric about global prosperity and “win-win” partnerships — it would still make sense. The economic powerhouse that is China requires energy to run, and this is something the country has not been able to handle on its own since at least 1993.

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A general view of the Atasu control station of the Atasu-Alashenkou pipeline in Atasu. (AP Photo)

While it’s not as symbolic as a Chinese flag-brandishing freight train rolling into a European port for the first time or as sexy as transforming a squalid stretch of desert into a “new Dubai,” or building a Port City on reclaimed land, or high-speed trains between iconic European capitals, or as exhilarating as the futuristic talk of hyperloops, “flying trains,” or even as flashy as optic fiber on the Karakoram Highway, the most important driver behind the Belt and Road Initiative (BRI) is far more pragmatic: energy procurement.

On October 15th, Kazakhstan will begin shipping natural gas to China via a set of pipelines that run from the frontiers of Uzbekistan to Khorgos, a massive development zone that spews over the Chinese border. The one-year deal was signed on October 2nd between KazTransGas JSC, Kazakhstan’s largest gas company, and PetroChina Company Limited, and should see five billion cubic meters of Kazakh gas flowing into far western China for a prospective take in the ballpark of $1 billion.

Kazakhstan has the world’s 15th largest known reserves of natural gas, and is currently exporting 13.7 bcm of it abroad. This new deal with China will see this number upped by over one-third.

Before now, Kazakhstan hasn’t been shipping any of its own gas to China, but plans to eventually boost exports and transit of it to its eastern neighbor to 100 Bcm per year in the future — claiming that it has the capacity to ship 10 Bcm annually to China on its own.

This new source of gas for China is slated to come from fields in the west of Kazakhstan and flow through the Beineu-Bozoi-Shymkent pipeline before connecting in with the Kazakhstan-China pipeline, which came out of a 2007 deal between Kazakhstan’s everlasting president, Nursultan Nazarbayev, and Chinese President Hu Jintao and cost $7.5 billion to construct.

However, there are potential geo-economic ramifications to this new deal. Turkmenistan, Uzbekistan, and Russia are currently already pipelining their own natural gas to China and maintain long-term contracts to continue doing so. However, China’s appetite for this energy source is growing at an impressive clip, and is expected to rise 8.1% annually until 2030, which is far above the 2.1% global annual growth rate.

If we looked at the entire BRI in terms of China increasing, bolstering, and securing their energy supply lines alone — without any of the rhetoric about global prosperity and “win-win” partnerships — it would still make sense. The economic powerhouse that is China requires energy to run, and this is something the country has not been able to handle on its own since at least 1993.

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