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China’s gas plans unsettled by oversupply

China’s gas plans unsettled by oversupply

BEIJING: Prospects for a new Central Asian gas route have resurfaced nearly five months after they were declared dead as China sends mixed signals about demand for the clean-burning fuel. In a surprise statement on July 25, a Tajik government official told reporters in Dushanbe that China’s work on a 1,000-kilometer (620-mile) pipeline from Turkmenistan through Uzbekistan, Tajikistan, and Kyrgyzstan was already underway.

“China National Petroleum Corporation’s (CNPC’s) subsidiary, which is involved in implementation of the project, has already begun its activities,” said Tajikistan’s minister of energy and water resources, Usmonali Usmonzoda, according to the ASIA-Plus Information Agency. Usmonzoda said that CNPC’s Trans-Asia Gas Pipeline Company Ltd. had “started supplies of equipment and machinery … for the construction of tunnels” through mountainous Tajik regions, Azerbaijan’s Trend News Agency reported. The project to carry up to 30 billion cubic meters (1 trillion cubic feet) of gas annually through the 410- kilometer section is expected to be completed in two years, the minister said. Word of progress on the project, known as “Line D,” follows an Interfax report in early March, quoting an unnamed official of Uzbekistan’s oil and gas company Uzbekneftegaz as saying that the pipeline had been “postponed indefinitely with the agreement of the Chinese side.” The reported suspension caused analysts to write off the fourth branch of China’s Central Asia Gas Pipeline (CAGP) system, with some suggesting that the route plan was “dead.” The network’s three existing lines from Turkmenistan through Uzbekistan and Kazakhstan have a combined capacity of 55 billion cubic meters (bcm) per year. The Line D plan to bypass Kazakhstan with the new route through the region’s two poorest countries sparked doubts since it was announced in 2013. Both Kyrgyzstan and Tajikistan rely on imports for gas, raising risks for diversion and energy security.

Chinese officials have not commented on either the reported suspension or the startup reports. Analysts continue to view the Line D project skeptically. “My guess is that the Tajik minister does not want the project to be declared dead and the Chinese, for their own reasons, decided not to dispute this by remaining silent,” said Edward Chow, senior fellow for energy and national security at the Center for Strategic and International Studies in Washington. The Line D plan has given rise to a host of questions about China’s goals and motives in Central Asia. Did Beijing hope to reduce its risks by diversifying routes and building a detour around Kazakhstan? Or was it seeking a hegemonic role in the region by trying to tie all of Central Asia’s countries together with pipelines? China hasn’t said.