“With the deepening of Sino-Turkmen relations, Ashgabat appears to have objective concerns about falling into a strong dependence on the PRC. Given this, the Turkmen authorities are taking measures to diversify routes and their energy buyers’ list,” – Sinologist Ruslan Izimov reveals important aspects of Sino-Turkmen cooperation in the context of the regional situation in this cabar.asia exclusive.
Turkmenistan, along with Kazakhstan, has become one of the main recipients of Chinese investment among the Central Asian republics. Due to the strengthening of energy ties and accurate delivery of Turkmen gas to China in large quantities, the PRC has become Turkmenistan’s main trading and economic partner.
Today, the increased presence of Chinese capital in the Turkmen economy is evident. Following investments in the energy sector, Chinese companies have become involved in the financing of non-oil sector projects.
With the deepening of Sino-Turkmen relations, Ashgabat appears to have objective concerns about falling into a strong dependence on the PRC. In fact, Turkmenistan, along with other Central Asian countries bordering China, has begun to feel the strong Chinese influence. Given this, the Turkmen authorities to are taking measures to diversify routes and their energy buyers’ list. In particular, various options are being considered for Turkmen gas exports to Europe and South Asia. However, the measures taken do not give the needed results, while China’s share in the strategic sector of the Turkmen economy continues to grow.
In this situation, how will Ashgabat navigate its future path? Will the Turkmen neutrality policy change in the near future? What plans does Beijing have in relation to Turkmenistan? These and other equally important aspects of Sino-Turkmen cooperation in the context of the regional situation in Central Asia are discussed in this article.
Imports of Turkmen gas to China are a major area of bilateral cooperation. Currently there are three branches of the “Turkmenistan-China” gas pipeline with the total volume supplied by this pipeline reaching about 30 billion cubic meters per year. A significant amount of natural gas has been delivered since operation of the pipeline began. So, for example, by 31 August 2013, Turkmenistan delivered 60.645 billion cubic meters, and, as of May 19, 2016, the total volume of natural gas delivered from Turkmenistan to China reached 138.6 billion cubic meters.
Despite the slowdown in the Chinese economy, the increase in natural gas consumption continues to grow. Xin Li, research fellow at the Oxford Institute for Energy Studies and author of the report “Natural gas in China: a regional analysis”, stated that in the next 5 years the volume will reach 315 billion cubic meters annually. Given limited domestic natural gas production, Chinese authorities continue to look for opportunities to increase the volume of imported gas. In this context, Beijing does not hide the fact that it identifies Turkmenistan as its main partner. Based on this, Chinese and Turkmen leaders agreed in September 2013 to build the 4th thread, line D. However, due to changes in the route and participants of the pipeline’s arteries, the project has become delayed. The 4th branch was originally planned to be delivered by the end of 2016/beginning of 2017. However, today, in the middle of 2016, the state of the project’s implementation is as follows:
In Uzbekistan, the latest official news on this project dates back to April of this year. In a report by the National Holding Company “Uzbekneftegaz”, it states that the company plans to finalize the pre-feasibility study (PFS) of the construction project of the fourth gas pipeline “Uzbekistan-China’ by the end of 2016. That is to say that to date the feasibility study is not ready, not to mention the laying of the pipe itself. It’s known that the shortest segment of the pipeline (the 200 km Uzbek portion) was estimated at $800 million, but construction of the pipeline has not begun.
In Kyrgyzstan, construction is postponed as well. As in Uzbekistan, the Kyrgyz section of the pipeline was to be completed by the end of this year. But in May of this year, the Minister of the Economy, Arzybek Kozhoshev, said that construction of Kyrgyzstan-China gas pipeline is shifted indefinitely. Moreover, according to Kyrgyzstani authorities, the cost of the project may increase again. Recent estimates have placed construction costs at $1.2 billion.
Unlike its neighbors, Tajikistan’s pipeline construction was started almost on time. In the autumn of 2014, the CNPC and joint-stock company “Tajiktransgas” agreed on and began construction. Media reports state that the Tajikistani route will go from Uzbekistan and extend from Tursunzade district, Hissar, and Shahrinav, and through Rudaki, Vahdat, Faizabad, Nurabad, Rasht district, Tojikobod, and Jirgital to the Kyrgyzstani border. From Kyrgyzstan, it will terminate in the city of Kashgar (Xinjiang). However, the project is not completed and the gas pipeline is still in the implementation stage.
We can see that the 4th branch, whose length is approximately 1,000 km, will not be built soon. Apparently, in addition to the objective, there are also subjective reasons. Whatever it was, the expected commissioning of new branches and increase in the volume of exported gas to China by the beginning of next year will not happen. This suggests that the anticipated expansion in the volume of gas in the near future is not expected. Given all these problems, some experts have questioned the feasibility of constructing the fourth branch on the already laid-out, examined route.
TAPI: a serious competitor?
There are equally less serious obstacles to expanding the “gas relationship ” between China and Turkmenistan, according to Chinese experts, thus creating a desire to diversify the list of Ashgabat ‘s natural gas customers. In this case, it refers to the beginning of implementing the TAPI project.
Despite the fact that the construction of the TAPI gas pipeline was delayed for a long time, at the end of 2015, all four players have officially confirmed the launch of the project. However, from this, the main obstacles standing in the way of the project have not lost their relevance. Evidently, one of the major factors of the project was and is likely to remain the pipeline’s safety. In connection with the close and gradual reduction of American military influence in Afghanistan, the issue of security along the pipeline’s route not only cannot be ignored but also becomes even more relevant.
Regarding the subjective factors hindering the TAPI project, then, certainly, the positions of leading regional players are in relation to it. As you may know, Iran still has not abandoned hope to build an alternative line to transport its gas to Pakistan. This project has certain attractiveness in the eyes of another player – China. Construction of the Iran-Pakistan gas pipeline, known as “The World”, would allow China to build another stable hydrocarbon delivery channel to its territory by land. But when Beijing considers the TAPI project, it primarily approaches from its plans to import Turkmen gas. As we know, construction of a fourth gas pipeline from Turkmenistan to China will increase gas capacity to 75-80 billion cubic meters as early as 2018. In this context, a new project and accordingly new direction of Turkmen gas exports may significantly affect the occupancy rate of the pipeline in the long term and that is not unimportant, especially when discussing natural gas prices.
Moreover, China is eager to hold a dominant position on the importers’ list of Turkmen gas. On the whole, the TAPI project does not fit into the overall strategy of China’s foreign trade in Eurasia. In particular, in evaluating TAPI’s launch, Chinese experts openly wrote that the main beneficiary of the project is the United States. Washington is more interested in TAPI than anyone, considering how the USA would immediately gain multiple bargaining chips by realizing this initiative.
First off, launching TAPI complicates the Iran-Pakistan pipeline, thereby Washington blocks diversification opportunities for Iranian gas exports. In addition, there were also plans to connect the Iran-Pakistan gas pipeline to China. On this count, the United States and their TAPI lobbyists beat and are against Beijing’s interests.
On the other hand, TAPI is objectively creating a competing project for China, and it plans to increase imports of Turkmen oil. As Chinese analysts write, using their connections to the Taliban and the Afghan army, the US is capable of affecting the supply from Afghanistan in the future thus the US will have leverage over Pakistan and India.
Another thing is that Turkmenistan, the main supplier and the source of energy for both projects, is justifiably wary of the growing dependence on China. If the PRC will be the only buyer of Turkmen gas, it can put Ashgabat in a situation where Beijing will be able to dictate terms and prices for Turkmen gas.
Based on this, Turkmen authorities are justified by the desire to somehow balance the involvement of regional powers in its energy sector. Currently, the Turkmen side has already started construction of their length of the project, 214 kilometers stretching to the Turkmen-Afghan border.
China, on the basis of the same considerations to diversify export routes of its products and the import of hydrocarbons, is showing particular attention to new routes. In particular, having only two railways crossing Central Asian-Chinese border, Beijing cannot realize all the available potential. That is why it has been discussing the China-Kyrgyzstan-Uzbekistan railway construction project for a long time. But this area still has unresolved fundamental issues. In the meantime, China has to rely solely on the existing railway checkpoints on the border with Kazakhstan. For this reason, in recent years China has begun to show increased attention to the Kazakhstan-Turkmenistan-Iran railway thread.
The Chinese side uses different formats and platforms in order to use the available branch to export their products to the Persian Gulf. In particular, at the beginning of this year, the China-Kazakhstan-Turkmenistan–Iran railway launched a test run. According to Turkmen media, the train started in late January from the industrial center of the People’s Republic of China, Yiwu city in Zhejiang, and covered the 4,491 kilometers distance to Kazakhstan in five days. The train then crossed Kazakhstan in four days with the distance to Turkmenistan’s border being 3,417 kilometers. Thus, the total length of the China-Kazakhstan-Turkmenistan-Iran route is about 10,000 km and the travel time, about two weeks on average, two times faster than by sea, which takes 25-30 days.
Neutrality = Security?
Turkmenistan’s neutrality has for many years provided the country with stability, at least in the domestic political context. A minimized exposure to external influences has not provided occasions for the formation of a real opposition in the country aided by information independence. Though, according to some experts, there is internal separatism growing in Turkmenistan. Part of the regional elite is dissatisfied with the central government’s actions. According to A. Knyazev, it is precisely the extraction of and export of gas in Mary vilayat that is connected local residents’ displeasure. Experts note that, in this area, there are certain groups capable of opposing the government.
But the external impact on security in the absence of specific agreements with any country can lead to unpredictable consequences. In the past year, amid the intensification of terrorist groups along the Afghan border, Ashgabat has had to think seriously about the necessity of military cooperation with external partners. An even greater fear of the Turkmen authorities is the increased activities of international terrorist organizations like Daesh. Most recently in Kabul, Daesh supporters made a major terrorist attack, thereby showing that the threat of Daesh to Central Asia is quite real.
In this regard, it should be noted that at present, China is already offering Turkmenistan assistance at various levels regarding security issues. In a new report, “The Yellow Book in Central Asia: a report on the development of Central Asian countries in 2016”, published by the Institute of Russia, Eastern Europe, and Central Asia, leading Chinese experts have identified Turkmenistan as an important strategic partner in the region. But at the same time, Chinese analysts say that in recent years the Turkmen neutrality policy has shown its weaknesses. As Chinese experts write, Turkmenistan has a weak army, which is unable to protect its southern borders. Thus, China is demonstrating its concern for its investments, especially regarding infrastructure projects and so on. How China can ensure the safety of these facilities can be seen in Afghanistan where the Aynak mine area is completely controlled and protected by the Chinese military.
Meanwhile, according to some reports, the Turkmen authorities have already purchased arms from China. In last year’s military training in Turkmenistan, there appeared air defense missile systems from China. The Chinese issue of “Huanqiuwang” confirms the sale of Chinese anti-aircraft missile systems to Turkmenistan.
But it is important to understand regarding the issue of security in Turkmenistan that Russia’s position is still much stronger. And perhaps it is here, in Turkmenistan, that the formula of the division of labor between Russia and China will be successful. This will be facilitated on the one hand by the strong economic position of China in Turkmenistan. Here, Russia cannot compete on equal terms with China. On the other hand though, not having a military base in Turkmenistan, Russia has a strategically important lever in military terms in the form of the Caspian Flotilla.
Soft power at work
Chinese projects of cultural influence in Turkmenistan appear as one of the most successful in the region. Despite the fact that there has not been a Confucius Institute opened, Chinese language study is underway.
Recently, Turkmen authorities have decided to introduce the study of Chinese as a foreign language in several areas of the country. Among them, Balkan, Lebap, Akhal, Dashoguz, and Mary provinces have seen the Chinese language introduced. In addition, Chinese is now taught alongside English, German, and French in Turkmen schools and universities.
In addition, the Chinese traditionally allocate generous grants Turkmen schoolchildren and students to study in Chinese universities. According to data from 2014, there are about 1,500 students in China.
In China, the China Chu-Tian Center for Turkmenistan Studies has been running for several years. In turn, this shows that Beijing is seriously able to cooperate with Turkmenistan.
Turkmenistan’s political system and policy of neutrality are “in the same spirit” as China. As a result, the Sino-Turkmen relations have a solid foundation by means of support at the highest political level.
Further deepening of bilateral relations is conditioned by the implementation of several large-scale joint projects. Of course, the core of Sino-Turkmen cooperation in the years to come will be the “gas connection.” After all, China has become the main importer of Turkmen gas.
In the coming decades, Chinese gas consumption will definitely increase. According to a BMI Research study, China will increase consumption from 171 billion cubic meters in 2013 to 283 billion cubic meters by 2020. Moreover, the data shows that China is buying more pipeline gas thus relying on overland routes of hydrocarbon imports. Based on a strategy to reduce dependence on sea routes for energy deliveries, China is becoming increasingly dependent on pipeline gas. Turkmenistan is for competition when it comes to importers of natural gas. Already, Turkmen natural gas supplies about 50% of all Chinese gas imports. This circumstance is due to China’s “jealousy” of Ashgabat’s attempts to diversify its export routes. Moreover, even in Turkmenistan’s domestic market, Chinese companies are trying to prevent other investors. Proof of this can be seen by China’s reaction to the possible involvement of Japanese capital in developing oil and gas fields (based on Gurbanguly Berdimuhamedov’s 2013 visit to Japan). Then, Chinese authorities were able to succeed. However, it should be noted that the Turkmen authorities continue to look for opportunities to attract other major powers. In particular, the Turkmen side has recently reached an agreement on attracting Japanese companies to construct the 4th branch of the pipeline to China.
At any rate, Turkmenistan remains one of the most important priorities of China’s Central Asian strategy. In line with Beijing’s new “One Belt-One Road” foreign trade initiative, Turkmenistan remains a key source of hydrocarbons for the long term, as well as being important for a Beijing transportation and transit hub through which China would like to access the Gulf markets.
Turkmen authorities, in turn, understand that China is their most reliable economic partner, whose needs and purchasing of their energy depends on the economic development of the republic.
Measures taken by Ashgabat lately to expand the list of energy partners have not brought the expected results. In this situation, the objective seems to be to further deepen Sino-Turkmen relations in the commodity and non-commodity sectors of the economy, as well as new agreements in the military, cultural, and humanitarian fields.
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Author: Ruslan Izimov, Leading Sinologist (Astana, Kazakhstan)
The views of the author may not coincide with the position of cabar.asia