Accessibility links

China, Kazakhstan Pipeline Agreement Secures Increased Trade - 2004-05-18

China scored a victory this week in its bid to secure new sources of oil with an agreement to build a 1,200 kilometer pipeline from neighboring Kazakhstan. The new pipeline is seen as a sign of China's growing economic influence in Central Asia.

The agreement was signed Monday during a visit to Beijing by Kazakhstan's President Nursultan Nazarbayev.

Kazakhstan has been working to boost its oil revenues and expand its market, which until now has been mostly limited to Russia. Once the China pipeline is completed next year, Kazakhstan will be able to deliver an estimated 10 million tons of oil annually.

The agreement is to build a 1,200 kilometer segment of a pipeline that will stretch 3,000 kilometers across Kazakhstan from the Caspian Sea to western China's Xinjiang Autonomous Region.

The agreement will sharply increase trade between China and Kazakhstan. Analysts see the pipeline as yet another sign of China's growing influence in Central Asia.

They say China's biggest benefit from the deal will be access to a new oil source, helping it meet rapidly growing demand. Harry Dimitriou is a professor of planning studies at the University College of London who has been looking at the effect that China's booming economy is having on the rate of vehicle ownership.

"The most likely scenario is for China to have 180 million vehicles, exclusive of trucks, by the year 2020," he said. "If you add the 30 percent of trucks, this could really be projected to 234 million in total."

Graham Smith is the lead transport specialist at the World Bank office in Beijing. He says the rising demand for oil in the world's most populous country is something to consider, given the recent surge in world oil prices.

"If you extrapolate these double-digit growth rates for car ownership and use, only a few years into the future, China will be very dependent on imported oil," said Mr. Smith. "For obvious reasons, that is a matter of concern."

It was only in the late 1990's that China started importing significant quantities of oil. Chinese officials say that in the past year alone, demand has risen from 3.3 million to more than five million barrels a day.

Chinese and Kazakh officials say work on the pipeline starts in August. They did not say how much the project would cost.