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China's Hu visits Central Asia with eye on energy

China says gas pipeline from Turkmenistan nearly done
Beijing (AFP) Dec 10, 2009 - China said Thursday a natural gas pipeline from Turkmenistan to its Xinjiang region would be completed this month, as President Hu Jintao prepared for a weekend visit to the central Asian nation. The pipeline will ship gas over more than 1,800 kilometres (1,120 miles) from Turkmenistan, through neighbouring Uzbekistan and Kazakhstan to China, vice foreign minister Wang Guangya told reporters. "The construction started in July 2008 and one of the two lines of the project will be completed in mid-December this year," Wang said at a briefing on Hu's upcoming trip. According to earlier state press reports, the two-line project will have a total transmission capacity of 30 billion cubic metres (1.1 trillion cubic feet) of gas a year to energy-hungry China. Hu is due to leave for Kazakhstan on Saturday and will head on Sunday to Turkmenistan, where he will attend an inauguration ceremony of the so-called Central Asia-China gas pipeline.

CNPC-led consortium wins contract for Iraq's Halfaya field
Baghdad (AFP) Dec 11, 2009 - A consortium led by China's CNPC was awarded the contract for Iraq's Halfaya oil field at an auction on Friday, Oil Minister Hussein al-Shahristani said. The group also includes Malaysia's Petronas and France's Total. It requested fees of 1.40 dollars per barrel of oil extracted from the field, and projected that it would produce 535,000 barrels per day. Halfaya, in southern Iraq near the border with Iran, has proven reserves of 4.1 billion barrels of oil. It lies just north of the giant Majnoon field. The successful bid beat three other offers. A joint bid between Norway's Statoil and Russia's Lukoil requested 1.53 dollars per barrel and projected production of 600,000 bpd. India's ONGC and India Oil submitted their own bid with Turkey's TPAO, requesting 1.76 dollars per barrel with production of 550,000 bpd. Separately, a consortium made up of Italy's ENI, South Korea's KoGas, the US's Occidental Petroleum, China's CNOOC and Angola's Sonangol asked for 12.50 dollars per barrel, with projection of 400,000.
by Staff Writers
Almaty (AFP) Dec 11, 2009
Chinese President Hu Jintao is set to visit the Central Asian nations of Kazakhstan and Turkmenistan this weekend, as Beijing continues a push to lock up access to the region's strategic energy resources.

After a one-day visit to Kazakhstan on Saturday, Hu will depart for Turkmenistan, where he will participate on Monday in the opening of a 7,000 kilometre (4,350 mile) pipeline to export Turkmen natural gas to China.

Hu's visit caps a year of major gains for Beijing in Central Asia where it has made significant inroads by spending big in what was once considered Moscow's exclusive geo-strategic domain.

The pipeline, the first major direct route for Central Asian gas to China, is a clear indicator of Beijing's growing regional clout, said Ana Jelenkovic, an analyst with New York-based political risk consultancy firm Eurasia Group.

"It's even more significant in that it's gas and not oil because when it comes to gas supplies, those have always been more sensitive for Russia and there's been a greater focus from Moscow on securing gas flows," she said.

Beijing has spent heavily across Central Asia this year, including a ten billion dollar (6.78 billion euros) loan to Astana as part of a deal that saw it take an increasingly prominent stake in Kazakhstan's vital energy sector.

Hu is expected to meet with his Kazakh counterpart Nursultan Nazarbayev on Saturday, following an opening ceremony in Astana for a portion of the pipeline which snakes through Kazakhstan and Uzbekistan before entering China.

The heads of Turkmenistan, Uzbekistan and Kazakhstan will all assemble with Hu for the ceremony in Ashgabat, a rare show of unity by the hyper-competitive heads of state in the region and a demonstration of Hu's clout here.

"On December 14 the pipeline will begin operations," Turkmen President Gurbanguly Berdymukhamedov said in an interview with Chinese journalists published in state newspaper Neutral Turkmenistan.

"From that day forward, in accordance with our agreements, Turkmenistan will furnish China with 40 billion cubic metres of gas annually for 30 years," he said.

Turkmenistan, an energy-rich but isolated ex-Soviet nation, is believed to have some of the biggest gas reserves in the world, nearly all of which is currently exported to Russia via a network of ageing Soviet-era pipelines.

A pipeline explosion earlier this year sparked a row with Russian energy giant Gazprom that saw exports of Turkmen natural gas almost completely cut off, prompting Ashgabat to accelerate efforts to secure alternative routes.

The EU has been anxious to exploit the rift to secure Ashgabat's cooperation in a direct export pipeline such as the long-stalled Nabucco project, which would help ease Europe's reliance on Russian natural gas supplies.

But while the EU has stumbled to overcome the hurdles to such a project, China has been quick to act, lending Ashgabat four billion dollars (2.71 billion euros) earlier this year and moving ahead on the new pipeline.

The pipeline, through which the China National Petroleum Corp. (CNPC) will eventually import up to 40 billion cubic metres of gas per year, is a sign that Beijing is ahead of the West and Russia in the race for resources.

"This is no longer a Russia versus the West game for the gas. It is definitely now a Russia versus China game for the gas supply. I wouldn't put Western-backed projects like Nabucco even as a contender," said Jelenkovic.

related report
China's Hu kicks off tour of energy-rich Central Asia
Astana (AFP) Dec 12, 2009 - Chinese President Hu Jintao opened the Kazakh section of a gas pipeline from Central Asia on Saturday, as he kicked off a tour highlighting Beijing's growing influence over the region's energy resources.

Hu attended a ceremony at the headquarters of Kazakh state energy firm KazMunaiGaz, smiling broadly as he pressed a button symbolically opening the Kazakh section of a pipeline that will deliver Turkmen natural gas to China's western Xinjiang province.

"With the launch of this pipeline, it is like the ancient Silk Road has been restored," said Kazakh President Nursultan Nazarbayev, referring to a mediaeval trading route linking East and West.

Addressing workers, who were putting in place the final weld on the pipeline in the steppes on the Kazakh border, via video link, he added:

"This pipeline will be beneficial for all of our countries. It is a promising, strategic project."

Speaking to reporters after the talks with his host, China's Hu said the two leaders pledged to deepen cooperation in the energy sphere.

Hu said one of the key priorities for the two nations was "to support close ties at the high and highest levels (and) deepen mutual understanding and trust."

On Monday, Hu, Nazarbayev, Uzbek President Islam Karimov and Turkmen President Gurbanguly Berdymukhamedov will attend the official opening of the 7,000 kilometre (4,350 mile) pipeline in Turkmenistan.

The pipeline, the first major export route for Central Asian natural gas to China, is seen as the culmination of years of quiet diplomacy by Beijing to gain access to the region's vast energy supplies.

Central Asia, a vast resource-rich region wedged between Afghanistan, China Russia and Iran, has been dominated by Moscow since the Kremlin's imperial expansion in the 19th century.

But Moscow has struggled to maintain its influence over the region in recent years, especially as its coffers have been depleted by the global financial crisis, which has buffeted Russia's commodities-driven economy.

China has taken advantage of recent Russian foreign policy stumbles in Central Asia to boost its own influence, said Sarah Michaels, senior editor for the ex-Soviet Union at Oxford Analytica, a Britain-based think tank.

"China's increasing presence in Central Asia is more the result of Russia's foreign policy missteps than a directed strategy by Beijing for engaging with its neighbours," she said.

Beijing has spent heavily across Central Asia this year, including a 10 billion dollar (6.78 billion euros) loan to Astana as part of a deal that saw it take an increasingly prominent stake in Kazakhstan's vital energy sector.

But the soon-to-open natural gas pipeline from Turkmenistan, which represents years of quiet lobbying and public spending, is the crown jewel in Beijing's Central Asia policy.

Turkmenistan, an energy-rich but isolated ex-Soviet nation, is believed to have some of the biggest gas reserves in the world, nearly all of which is currently exported to Russia via a network of ageing Soviet-era pipelines.

A pipeline explosion earlier this year sparked a row with Russian energy giant Gazprom that saw exports of Turkmen natural gas almost completely cut off, prompting Ashgabat to accelerate efforts to secure alternative routes.

The EU has been anxious to exploit the rift to secure Ashgabat's cooperation in a direct export pipeline to help ease Europe's reliance on Russian natural gas supplies, but has struggled to win concessions.

China has been quick to act in its stead, lending Ashgabat four billion dollars (2.71 billion euros) earlier this year and moving ahead on the new pipeline.

The China National Petroleum Corp. (CNPC) will eventually import up to 40 billion cubic metres of gas per year through the pipeline, the Turkmen government has said.

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