Monday, February 4, 2008

China and Russia compete for Central Asia

There is an ongoing competition between Russia and China (and to some extent the United States as well) to gain influence over the former Soviet republics of Central Asia and in that way secure access to their oil and natural gas resources.

One of the latest episodes was an agreement between China and Turkmenistan on the price of natural gas that the latter would export to China through the planned Central Asia Gas Pipeline. If this agreement and the associated pipeline goes on, China could buy up to 30 billion cubic meters of natural gas per year. While this would still account for a small percentage of China's total needs it would be another step towards increasing its presence in the region and shifting supplies away from Russia. China has already signed a deal with Kazakhstan for oil and the pipeline is under construction.

According to different analysis, Turkmenistan's relatively new president would be willing to play Russia, China and the United States against each other to see who offers more benefits to the former Soviet republic. Before the deal with China was announced, Turkmenistan signed another one with Kazakhstan and Russia to build a pipeline along the coast of the Caspian sea and into Russia. These project is directly opposed to the trans-Caspian one that would take gas towards Azerbaijan and then to Turkey and which the United States has supported in the past.

Apparently, Turkmenistan's government is willing to get offers for the three projects and try to get them all going on by promising all that it will support them. While the talks with China are the most recent, Turkmenistan already exports 97 percent of its gas to Russia. It will be very interesting to see if China can wrestle away some of these countries from Russia.

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