Chinese-Kazakhstand Oil Line Passes Tests

September 2009 Vol. 236 No. 9

Extension of the major oil pipeline from China’s Xinjiang Uighur Autonomous Region to central Kazakhstan and now the Caspian Sea has passed initial tests.

The Kenkiyak-Kumkol pipeline will give China access to more of its neighbor’s oil resources in its western regions.

China has been active in engaging its Central Asian neighbors through the Shanghai Cooperation Organization that gives it the opportunity to wield influence over the region’s cash-poor but energy-rich countries through military exchanges and loans.

China and Kazakhstan agreed to a “loan-for-oil” deal worth US$10 billion that allows CNPC to buy stakes of MangistauMunaigas. The purchase is strategic because the Kazakh company owns the fields near the extended oil pipeline. Chinese companies have bought shares in Kazakh oil producers, including CNPC-AktobeMunaiGaz, operator of Kenkiyak and Zhanazhol fields and PetroKazakhstan.

Beijing wants to have up to 40 Bcm of Central Asian gas imported to the mainland annually beginning from Turkmenistan then through Kazakhstan and Uzbekistan.

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