Page 4 of 4 China plays its own energy
game By M K Bhadrakumar
gas pipeline from Siberia would be built
for this purpose. In October, construction began
on the West Siberia-China gas pipeline in the
Altai region. Gazprom is reportedly poised to
conclude an agreement with China soon.
Russia's long-term energy-export strategy
for Asia obviously remains China-oriented. Ahead
of the construction of its oil pipelines to China,
Russia is already funneling its oil via
Kazakhstan. According to a
report by the Siberian branch of the Russian
Academy of Sciences, Russia aims to supply
three-quarters of its oil exports to Asia to
China.
The study estimates that Russian
oil exports to China will reach 32 million tons in
2010, 80 million in 2020 and 90 million by 2030.
Yet China probably estimates that on balance,
Russia's energy policy has been historically
oriented to Europe. The bulk of Russia's energy
exports has been to European markets. Only 3% of
its current exports of oil are directed toward the
eastern Asian market, whereas it has no gas
exports to the Asian region at all.
Thus
China's energy imports will continue to depend for
the foreseeable future on the Persian Gulf region
accessed via long sea routes. In short, Beijing
calculates that self-interest demands that China
harmonizes its energy policies with the United
States.
US diplomacy has sensed this
during recent months. From the US perspective,
strong imperatives already exist for a strategic
US-China economic partnership (such as imbalances
in the world financial system; China's funding of
US budget deficits; interest-rate and
currency-exchange policies, etc) and embedded
within it a coordinated approach toward the 21st
century's world energy order comes natural. The
equation is mutually fulfilling - arguably, even
more compelling than what prompted the US overture
to China in the early 1970s.
Clearly,
nothing suits Beijing better than a strategic
partnership with the US that entails the removal
of all restrictions in the transfer of US
technology to China. China is also dealing from a
strong hand, with foreign-exchange reserves having
exceeded $1 trillion in October, most of which are
dollar-dominated.
China has favored
Westinghouse over Russia's Atomstroiexport for the
$8 billion deal on the four nuclear power plants.
This is despite robust Russian lobbying at a time
when Russian exports to China are dropping. A
Chinese commentator blandly wrote that Beijing
simply couldn't bring itself to let Paulson return
to Washington "empty-handed". The political
message emanating out of Saturday's five-nation
energy meet in Beijing, therefore, will resonate
well into the new year, especially in Moscow and
the European capitals.
From Moscow's
perspective, it will influence the important
investment decisions pending regarding Sakhalin-1,
Sakhalin-2 and Sakhalin-3, the Shtokman gas fields
and the massive reserves in the Russian Far East
on the whole. Thanks to its new "US connection",
China has significantly strengthened its
bargaining position with regard to Russia in their
bilateral energy cooperation. China's top energy
policymaker, Ma Kai, said at Saturday's energy
summit, "We want to send out an important,
positive message, which is: the world's key
energy-consuming countries plan to strengthen
mutual cooperation."
Ma emphasized that
the five countries represented had common problems
and could benefit from a joint approach to
tackling them. The official China Daily commented
that Ma's statement reflected "shared concern over
increasingly nationalistic policies in major oil
and gas producers that threaten to stymie
investment and limit new supplies". George Kennan
would have nodded approvingly.
Note 1. George Frost
Kennan (February 16, 1904-March 17, 2005) was an
American adviser, diplomat, political scientist
and historian, best known as "the father of
containment" and as a key figure in the emergence
of the Cold War. He later wrote standard histories
of the relations between Russia and the Western
powers. (From Wikipedia, the free encyclopedia.)
M K Bhadrakumar served as a
career diplomat in the Indian Foreign Service for
more than 29 years, with postings including
ambassador to Uzbekistan (1995-98) and to Turkey
(1998-2001).
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