Fri 13 May 2011 02:34:31 PM EDT

China and Its Energy Craving

January 27, 2010 Shilpa Bagul

A country survives and develops when it reaps every aspect to sustain its national security. Today China´s policies are
harvesting the dividend and hence it is thriving in multiple sectors. China´s changed oil strategy and 21st century´s
new great game has taken a distinct shape on the Eurasian land mass. Not only Russia, Turkey and Iran are also the
healthy competitor of China, eventually helping in the progression. China had historical affiliation with the Central Asian
republics, which also facilitates in the development of their relation.

China has started operating oil pipeline through Kazakhstan´s Caspian shore to Xinxiang into the China. On 14
December 2009, the president of China Hu Jintao joined the leaders of Central Asian Republics to inaugurate 1,133-
kilometre gas pipeline across Central Asia. It started carrying gas from eastern Turkmenistan through Uzbekistan and
Kazakhstan into the northwestern Chinese region of Xinjiang, where it connects with pipelines from local fields. A
second leg of pipeline goes into operation in 2010. China has this gas deal over the 30 year of time period. China
expects to receive 13 billion cubic meter of pipeline gas from Central Asia in 2010, 30 billion cubic meter by the end of
2011 and over 40 billion cubic meters by 2013. Interestingly, the year 2013 delivery will be slightly over half of China´s
total gas consumption in 2008.

Previously, China did not have trade concord with Turkmenistan. Owing to China´s energy quest and this gas pipeline,
China has become Turkmenistan´s lifelong trading partner. Eventually, China may soon replace Russia in energy trade.
Geographically Turkmenistan is far away from China, but China´s energy thirst forged its long journey simple and
discerned the prominent destination through adjoining republics of Kazakhstan and Uzbekistan. By the embrace of
China, Turkmenistan secures its financial stability in the region.

According to Energy Information Administration, China consumed an estimated 7.8 million barrels / day of oil in 2008
which made it second largest oil consumer in the world after USA. In the Same year China also produced an estimated
4.0 million barrels / day of oil liquids, of which 96 % was crude oil. China´s net oil imports were 3.9 million barrels /
day in 2008 which was the third largest net oil importer in the world behind the United States and Japan. As per EIA
forecast s, China´s oil consumption will continue to grow with oil demand reaching 8.2 million barrel / day in 2010.

Current oil pipelines from Central Asia to china passes through Xinjiang. Moreover, it holds large deposits of Oil and
minerals with Tarim basin to potentially overtake production from eastern Daqing and Bohai Bay areas. Chinese
province Xinjiang has Uighurs as majority who demand independence from China. Last July riots saw 200 deaths in
Xinjiang. The situation and contribution of Xinjiang in China´s energy security seems of immense significance to china.

China is not only economically investing money in the oil sector or importing oil from Iran, Africa or Central Asia for its
growing demand but China´s companies are also escalating their presence, and involvement in the construction,
development and expansion of the giant refineries. This adds in the molding of intimate relations with the exporting
countries. China has invested $6.5 billion in Iranian oil refineries and the five African oil rich countries such as Angola,
Equatorial Guinea, Nigeria, the Republic of Congo, and Sudan. Irrespective of United Nations sanctions on Iran, China is
the second largest oil importer and currently gets 13.6% of its oil imports from Iran.

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