News Room - Business/Economics

Posted on 14 Dec 2009

China's Hu to unveil key Turkmenistan gas pipeline

Chinese President Hu Jintao is set on Monday to inaugurate a landmark pipeline to transport Turkmen gas across Central Asia into China's energy-hungry industrial centres.

 

The 7,000 kilometre (4,350 mile) gas pipeline is a significant victory for Beijing, marking the culmination of years of lobbying for influence over the region's strategic energy resources, traditionally dominated by Moscow.

 

Speaking on Sunday after a meeting with Turkmen President Gurbanguly Berdymukhamedov in Turkmenistan's capital Ashgabat, Hu praised his country's growing ties with the resource-rich region.

 

"I am delighted to be taking part in the opening of this gas pipeline from Central Asia to China. The opening of this pipeline offers the clearest evidence of our friendship," he said, speaking through a translator.

 

The ceremony is to take place in Samandepe, the starting point of the pipeline in eastern Turkmenistan near the border with Uzbekistan.

 

Central Asia, a vast resource-rich region wedged between Afghanistan, China Russia and Iran, has been dominated by Moscow since the Kremlin began aggressively expanding its imperial borders in the 19th century.

 

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

 

But where Moscow has faltered, Beijing has succeeded, wielding its influence in the form of its enormous cash reserves, handing out loans and construction projects such as the Turkmenistan pipeline to woo the region's leaders.

 

Beijing has spent heavily across Central Asia this year, including a 10 billion dollar (6.78 billion euros) loan to Kazakhstan and a 4 billion dollar (2.71 billion euros) credit to Ashgabat in a bid for access to the massive South Yolotan gas field.

 

Hu will be joined by Kazakh President Nursultan Nazarbayev, Uzbek President Islam Karimov and Berdymukhamedov, a rare gathering by the often bickering neighbours that illustrates China's clout.

 

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.

 

The China National Petroleum Corp. (CNPC) will eventually import up to 40 billion cubic metres of gas a year through the pipeline, which runs for 1,800 kilometres in Central Asia before reaching China's western Xinjian province.