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THE PARTNERSHIP OF KAZAKHSTAN AND CHINA IN THE ENERGY SECTOR
P.Kilybayeva, A.Ibrayeva, M.Mametay L.N. Gumilyov Eurasian National University abdullaevna_96@mail.ru
Kazakhstan and China have great prospects for cooperation in the energy sphere of cooperation. But the energy future of these countries carries a great potential for change, related to the shortage of world energy resources. Dialogue between the two countries in the sphere of extraction and use of energy resources will be determined by the domestic political and economic situation on the Asian continent.
Key words: Kazakhstan, China, energy sector, oil, cooperation.
Nowadays China acquires the status of the most important economic player in the world and regional markets [1-6]. Kazakhstan is building a relationship with one of the largest economies of the world on the search for mutual understanding, establishing cooperation and conjugation of interests and areas of interaction. Kazakhstan press for establish with China relations, strategic cooperation and seeks own place in its market and the opportunity to develop through geographical proximity with the PRC. In the sphere of economy, the priority area of support for the establishment of market relations and the exchange of experience in the implementation of socio-economic reforms.
The place of Kazakhstan in the international division of labor is currently determined by the export of gas, oil, metal and other goods. Its inclusion in the international energy and transport network and the prospects for their development increases the country's political and economic weight in the international arena. Kazakhstan, using the favorable price situation, which has developed in the world markets of hydrocarbon raw materials, metal and some other goods, having increased the export of commodity goods, has significantly strengthened its economy. At present, the intensive sale of raw materials without deep processing doesn't fully meet the interests of the national economy. Countries, called themselves strategic partners, have their own plans for extracting and using natural resources of Kazakhstan.
The approach of the Chinese side to the development of trade and economic cooperation with Kazakhstan is based on such key factors as the interest in obtaining
access to sources of raw materials, the desire to expand its presence in the segments of the Kazakh market.
Energy is a key factor, which affects to the internal and external development strategy of each sovereign state. Energy independence and security of the country are directly dependent on the level of development of the fuel and energy sector.
China's economic interests in Kazakhstan are closely linked to its energy policy, with the desire to turn Kazakhstan's oil-bearing zones into a permanent and reliable source of fuel for the growing Chinese economy. This is confirmed by the fact that, for several years now, China has been holding the fifth position in the list of the largest investors in the Kazakh economy, with the overwhelming majority of them going specifically to the oil and gas industry.
Thus, China sees Kazakhstan like a supplier of raw materials and fuel resources for its dynamically developing economy, which requires more and more resources every year.
Oil. At present, the energy world is divided into resource-rich and resource-deficit countries. The first group of countries, and approximately 20 of them, are states that export oil, gas and products of their processing to world markets. Basically, these countries are members of the organization of OPEC oil exporters, in which three quarters of the world's oil reserves are located. Most of the states of the world community import and consume the hydrocarbon resources of these countries, which are necessary for the development of national economies. Particularly large energy resources are required by the rapidly developing economies of countries, in particular, Southeast Asia, China, India, South Korea, etc.
The main consumers of oil are China and India, which account for about 79% of the increase in energy consumption in the world. By 2020, annual oil consumption of China will increase to 500 million tons, with a deficit of about 240 million tons per year.
At present, domestic demand for oil in China is 30% covered by imports. At the same time, it should be noted that China's economy depends on oil imports, but is not vulnerable. This is explained by the peculiarities of building its energy sector. First, the country is also a major producer and consumer of energy resources. Thus, in 2005, crude oil production amounted to 180 million tons, and imports exceeded 122 million tons. Secondly, China's economy is the world's only big economy, whose energy is based on coal, whose reserves the country holds the third place in the world (explored reserves - 270 billion tons). The production of hard coal in the country exceeds 2.2 billion tons, which determines the dominance of coal in the energy mix. This determines the structure of energy consumption, where oil is about a quarter, and the share of other sources is relatively small. In particular, in the total volume of energy
sources, the share of coal is 71%, oil - 22%, natural gas - 3%, hydropower - 4%, nuclear energy -2% [7].
Since the Middle East and Africa are the main supplier of oil to the People's Republic of China, an uneasy geopolitical situation in these regions of the world causes a special concern for China, which can affect the uninterrupted supply of energy carriers. The instability in the Middle East, which is currently the oil donor of China, has increased and is remaining. About 12% of China's oil imports fall on Iran, and if the situation in the Persian Gulf worsens, China may be cut off from this energy source. A certain threat to China's energy security is the desire of the USA to establish control over sea communications, through which oil is delivered to East Asia.
The increase in the short term of import requirements for oil and gas, high world prices for hydrocarbons, as well as the rapidly growing economy, stimulate China's entry into the arena of the world energy policy in search of new oil and gas resources. The search for oil and natural gas, as well as the opportunities for uninterrupted supply of these energy carriers, is a priority task determined by the country. Their ultimate goal is to ensure energy security, gain a foothold in new markets, which in the long term will allow stable and economically profitable supply of hydrocarbon raw materials to the developing economy of the country.
The greatest interest in this regard is Eurasia, with its rich natural resources. Proceeding from the developing geopolitical and economic situation, China has stepped up the Eurasian direction, in which Kazakhstan is one of the priority. This is largely due to the fact that the western regions of China, which share a common border with Kazakhstan, are geographically close to Kazakhstan's gas and oil fields, are now being intensively developed. It is interesting that Kazakhstan has the seventh in the world in terms of oil reserves, which, according to experts, will last at least 50 years. As applied to the territory of the CIS, Kazakhstan is the second state after Russia in terms of oil reserves. Oil production on land is carried out in more than 100 fields located in five regions of the country. The increase in production is provided at the fields of Tengiz, Karachaganak, Uzen. The main increase in explored reserves and hydrocarbon production is expected in the water area of the Caspian Sea, whose deposits are still under development and exploration. The largest Kazakh oil company is the state-owned KazMunayGas.
If in 2001 Kazakhstan produced 40.1 million tons of oil, then in 2006, - 65 million tons, or 62.5% more. Exports of oil, respectively, increased from 32.4 million tons to 54.6 million tons, or 68.5 percent. In 2007, according to the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan, oil production amounted to 67.2 million tons, of which 60.6 million tons, or 90.2%, were exported. Consumption in the domestic market amounted to 12.9 million tons, including 6.3 million tons imported from Russia to the Shymkent and Pavlodar refineries [8].
The foreign economic component of the national security strategy of Kazakhstan is aimed at partnership and rapprochement with states, communities and power centers that contribute to strengthening the economy. Therefore, Kazakhstan is interested in further development of energy cooperation with China, especially in the sphere of oil refining and petrochemistry. Deep processing will speed up the republic's exit to the world energy market with products with a high share of added value.
China came to the Kazakhstan energy market after the signing on September 24, 1997 of an intergovernmental agreement on cooperation in the field of oil and gas between the two countries, as well as the General Agreement between the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan and the Chinese National Oil and Gas Corporation (CNPC) on development projects in Kazakhstan and the construction of an oil pipeline from Kazakhstan to China.
The first among Chinese investors to come to Kazakhstan was the China National Petroleum Corporation (CNPC), which in 1997 bought 60.3% of Aktobemunaigas shares. After this deal, the Kazakh company was transformed into a joint venture «CNPC-Aktobemunaigaz». Subsequently, to the Chinese side was sold the remaining state block of shares of SNRS - Aktobemunaigaz. Over the past 10 years, the Chinese national oil and gas corporation CNPC has invested6.5 billion $ in Kazakhstan, including 429 million $ in 2006 [10].
The geographical position of Kazakhstan necessitates the construction of an extensive network of export pipelines. Since Soviet times, Kazakh oil transit through Russia, Ukraine, Belarus was sent to Europe, to the ports of the Black and Baltic seas. And at present Russia occupies a monopoly position on the way of Central Asian energy resources to Europe. Kazakhstan exports almost all its oil to the markets through the territory of Russia. The expansion of the Caspian Pipeline Consortium, going to the north, pushing the geography of Kazakh oil supplies, also goes through Russia. Thus, Kazakhstan's dependence on oil transit through Russia remains high, especially considering the small capacity of the pipeline and its dependence on one customer. Therefore, one of the strategic tasks was the diversification of routes for the transportation of energy resources to world markets. Kazakhstan needs large investments in the development of export routes, primarily for the construction of pipelines as the most effective and reliable ways of transporting hydrocarbons. Proceeding from this, the republic is actively working on a comprehensive analysis of promising infrastructure projects that allow diversifying and ensuring the sustainability of energy supply channels [11].
The position of Kazakhstan in the issues of diversification of energy resources transportation boils down to the following: relevant and promising is any direction that brings economic benefits to the country. Therefore, the direction of routes for laying new pipelines on world markets affect the energy interests of many states. The construction of new pipelines is costly due to technical difficulties, inflation, costs in
the global oil industry and other factors. Comprehensive technical and economic calculations have shown that routes for the transportation of hydrocarbons to the developing regions of Southeast Asia are very competitive, especially to China. Transportation of Kazakh oil through pipelines will cost China cheaper than the Middle East. Therefore, Kazakhstan's oil and gas have priority importance. China participates in laying oil and gas pipelines, equipping the adjacent territory.
In Kazakhstan in 2000, the Atasu oil pumping station was identified as the main starting point for oil transportation by rail to China. In order to ensure the uninterrupted supply of oil from the fields of western regions of Kazakhstan, China's consumers decided to build an oil pipeline between the two countries. For Kazakhstan, the construction of an oil pipeline to China is part of a policy of diversifying export resources, supported by the financial reliability of the partner, the activity of Chinese banks, the predictability of the buyer, and this is timely investment, equipment, labor, etc. The beginning of construction of the Kazakh-Chinese Atasu-Alashankou oil pipeline was launched on May 25, 2006 in the Atasu settlement of the Karaganda region. Its length exceeded 900 km, the capacity of the first stage - 10 million tons of oil per year. The second involves 20 million tons. One of the shareholders of this project is the Chinese National Petroleum Corporation CNPC, which covering all possible risks [12].
The source of Kazakh oil supplies will be the Kumkol field (producing 7 million tons of oil per year) and the Aktyubinsk region (annual oil production of 5 million tons), with the participation of the Chinese corporation CNPC. Industrial supply of oil to China began in July 2006. In 2007, the volume of oil delivery to the Atasu-Alashankou oil pipeline totaled 4,766,900 tons. The Kazakhstan-China oil pipeline is currently not used at full capacity, as it is not yet connected with the rich Caspian oil fields of Kazakhstan. This fact determined Russia's interest in transporting its oil through Kazakhstan. In the protocol for 2008, the Agreement between the Governments of the Russian Federation and the Republic of Kazakhstan on cooperation and development of the fuel and energy complex provides for the transit of Russian oil via the Omsk-Pavlodar-Aktau-Alashankou pipeline route to a volume of up to 5 million tons.
In August 2008, during the visit of President Hu Jintao to Kazakhstan, an agreement was signed to expand the Atasu-Alashankou pipeline by building a second pipeline to China, which could be put into operation in 2009. The capacity of the pipeline will be increased from the existing 10 to 20 million tons of oil.
June 4, 2005 in Astana, the President of the People's Republic of China Hu Jintao and the President of Kazakhstan N.Nazarbayev signed the Joint Declaration of the People's Republic of China and the Republic of Kazakhstan on the establishment and development of a strategic partnership. The enhancement of China-Kazakhstan relations as a strategic partnership is based on the successful implementation of the
Treaty on Good-Neighborliness, Friendship and Cooperation between the PRC and RK of December 23, 2002, the Program of Bilateral Cooperation between the two countries for 2003-2008, close cooperation in a multilateral framework, including the UN, the Shanghai Cooperation Organization (SCO), the Conference on Interaction and Confidence Building Measures in Asia (CICA) [13].
The state and prospects of strategic partnership relations between Kazakhstan and China, especially in the energy sector, are an important component of the interaction. Currently, business relations between the countries are developing not only in the oil industry, but also in the gas, nuclear, and electric power industries.
Kazakhstan-China cooperation in the field of energy contributes to strengthening the relations of strategic partnership between the two countries, meets the interests of China's energy security and diversification of the Kazakh oil sector. The strategic partnership program provides for broad mutually beneficial relations and a different focus of investment flows. Kazakhstan has repeatedly stated that its relations with China are not limited to plans for the extraction and transportation of gas and oil. This is confirmed by the joint communique of the People's Republic of China and the Republic of Kazakhstan signed by the heads of state on August 18, 2008 in Astana, where promising areas of cooperation are identified. In particular, in paragraph 11 it is written: "The countries will continue the transition from the implementation of major projects in the oil and gas sector to important projects in non-primary sectors, especially such as oil and gas engineering, food and textile industry, transport and logistics services, metallurgy, construction materials and tourism. The Chinese side supports the creation and development of joint ventures with the participation of Kazakh capital in China" [14].
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