Analysis of Post-Soviet Central Asia’s Oil & Gas Pipeline Issues

Vladislav V. Savin

 Ph.D., Independent energy analyst, former executive director of the Organization for Energy Politics and Energy Economics (OEPEE), Russian Federation.

Cherng-Shin Ouyang,

Ph.D., Independent  energy researcher, retired from Chung-Hua Institution for Economic Research (CIER), Taiwan.

Post-Soviet Central Asia is one of the new frontiers in world geological survey and mineral development[1]. Boasting huge hydrocarbon potentials, it offers enormous appeal to global players, both for countries adjacent to the Caspian Sea and far beyond. According to British Petroleum data (BP, 2009), proved oil reserves of Kazakhstan, Turkmenistan, Uzbekistan and Azerbaijan, totaled 48.0 bbl (billion barrel), or 6.4 mmt (million metric tonnes) at the end of 2008, or 3.80% of the world’s known reserve; that of natural gas totaled 12.55 tcm (trillion cubic metres) or 6.8% of the world. Kazakhstan, respectively, Turkmenistan are distinguished by much higher R/P ratios and hence brighter prospect in oil and natural gas production than most traditional exporters of the world[2].

Notwithstanding, it is one thing to exercise command over new found wealth after independence, but quite another to forge an effective energy development strategy, taking into account geographically awkward position of Central Asian countries as landlocked and wavering status between vassal and sovereign states, shifting market as well as power relations. To simplify exposition, in what follows Central Asian geopolitical and energy game could be divided into two phases (Round-I and -II), taking 9/11 as the date for demarcating the chain of interactive events that unfold overtime. The New Great Game in the region differs from the old one of the 19th century, as it involves more actors, more objects are under focus, and it is also geographically more extended. This New Great Game, after the emergence of the “Arab spring” 2011, becomes even quasi-chaotic, which nevertheless didn’t change its two-tiers nature.

History, geopolitics, and pipeline mappings

Retrospectively, Central Asia was home to the legendary Silk Road and an unending stream of tumultuous, complex, and fascinating history. In the last millennium, recurrent waves of warring nomads of diverse origins conquered the vast Eurasia steppes, established Khanates, then perished in perpetual cycle. This had been taking place and at times involving the more stable civilizations bordering Central Asia – be it Chinese, Persian, or Arabian – till the end of 19th century when imperial Russia took hold of the whole region. At that time, from Khiva to Bukhara, one after the other all Khanates fell into the hands of the economically and militarily more advanced Russia[3], and only upon breakup of the Soviet Union did history start to reset the button of power and market relations of Eurasia. But the world scene has already been radically transformed concomitant with marked reshuffling of the Caspian energy map. Unlike, however, the century-spanning classical rivalry between the Russian empire and the British empire in and around Afghanistan (see e.g. (Johnson, 2006) & (Meyer & Brysac, 2006)), now there are basically four poles – named as “first tier” countries – joking for supremacy: Russia, China, USA and EU, whereas the Central Asian republics play host for the new Great Game ( (Weitz, 2006), (Walsh, 1993)). Together with selected west Caspian (and/or Caucasus) transit hubs they are named as “second tier” countries.

Central Asia has abundant natural resources (i.e. hydrocarbons) but the region’s place in the middle of Eurasia has created problems for marketing and transporting them. In fact, the two problems are one and the same: to overcome “isolation” and thus economic backwardness of the region it is necessary to build not only transport networks that facilitate trade but also to build it in ways that optimize transnational trade flows. So, in Central Asia, the situation is more complicated, than can be adduced from purely engineering considerations (i.e. constructing oil & gas pipelines[4]).

From the standpoint of transport logistics (let’s speak from here on about pipelines), there is no easy route linking Caspian oil and gas with maritime shipping lanes leading to world major consumers (US, EU, China). To head directly west necessitates either skirting the Caspian, greatly increasing the length of any pipeline, or building underwater pipeline, which greatly increases the cost of the project, not to mention the fact that, for nearly two decades, division of the Caspian seabed has been under heated dispute among its five littoral states (see Figure 1). Heading east towards the Pacific Ocean is technically feasible (and since 2009 the gas pipeline Central Asia – China (CACGP) from Turkmenistan through Uzbekistan and Kazakhstan and since 2005 the oil pipeline Kazakhstan – China (KCP) are functioning), but there is well over 10,000km of distance to travel which raises the question of commercial viability. Running southeast towards the Indian Ocean through also feasible means traversing the Hindu Kush mountains of the war-torn Afghanistan.

Figure 1: Oil and Gas Resources in the Caspian Sea Area
Source: “Storm in a Precious Teacup,” The Economist, August 2
cit. based on http://www.payvand.com/news/09/sep/1102.html

figura1

Next comes the question of changes in the spatial setting of pipelines. Within the unified space of the former Soviet Union construction of Eurasian pipelines was primarily an issue of technical feasibility, balancing regional development against internal politics. By contrast, in post-Soviet Central Asia there is not a single rule-setting authority but a multiplicity of decision-making centers corresponding to the number of sovereign states in the region; their interests and preferences do not necessarily converge. Second, mapping of pipelines tends to be strongly influenced by outside forces, predominantly the quadrilateral poles formed of the US, the European Union, Russia, and China as well as the enterprises originating wherefrom, respectively.

Vying for control over the planned routes of pipelines much as geopolitical superiority, US-led “western” giants (US and EU) have established an united front for continuous advance into the Caspian, on top of what they have already mustered in the last century. Their strategic rival in this context emerged to be the Sino-Russian partnership which – based on common strategic goals – seeks to withstand if not to expel the incursion of any other power in the region. But there is no lack of scope for reconciliation and collaboration between all four poles with regard to specific issues as there is potential for conflicts among US and EU, and among Russia and China. As such the pipeline “power” game is characterized by a spectrum of competitive-cooperative relations among the poles and local actors hosting the game.

Thirdly, through a much broader perspective, the order of priority of promising pipelines to be built shifts in accordance with changes in regional tensions, world energy market, interstate power, climate, etc. Resurgence of the dual threat—pan-Islamism (Amineh, 2002) and pan-Turkism (Wang, 1998) – combined with cross territorial claims in post-Soviet Central Asia also pose challenge to the construction of transnational pipelines (ICG, 2002). Even if the sources of tensions are quashed, each country through which a pipeline passes can still obstruct the flow for any reason – from (geo)political to (geo)economic. In order to build cross-border pipelines, treaties and agreements must be signed and financial arrangements made, often with numerous interest groups competing. Signing such agreements involves two or more governments which is again politically sensitive, as may be exemplified by the sanctions imposed by the U.S. on Iran in 1996 and later (Katzman, 2009). In consequence EU failed to incorporate the most lucrative Iranian reserves into the proposed Nabucco gas project (Reuters, 2009). Complicating the matter further, pipelines are usually built by consortiums of governments and oil companies, and the views of Public do not always match those of Private.

As an offshoot of the territorial disputes, controversy over the legal rights to the Caspian and its seabed is equally disturbing. The respective claims (Bahman, 2009) over the seabed mineral wealth comes down actually to whether the Caspian should be classified as a lake or a sea (Oxmen, 1986) under the United Nation’s Convention on the Law of the Sea. As a lake, each littoral state would be entitled to an exclusive zone for a distance counting from the coast of the state in question to where it meets with the respective claims of adjacent countries—as defined by the “modified median principle” (MDF), the center of the Caspian would be a shared zone for all littoral states. If declared a sea, the entire Caspian would be divided up according to each state’s length of coastline. In general, Russia and Iran consider it as a lake; Azerbaijan and Kazakhstan prefer a sea definition, while Turkmenistan’s attitude is indecisive. According to estimates, Kazakhstan owns the largest share of seabed (30%), which is located mainly in the fossil-rich north Caspian, followed by Azerbaijan (20%), Russia (20%), Turkmenistan (17%), and Iran (13%) (Bahman, 2006). The differences in the outcome in dividing Caspian seabed between equal share- and MDF-principles are shown in Figure1.

Country Positions Survey

Russia: Historically, Central Asian oil and gas flowed through Russian pipelines. Keeping this arrangement intact, as Moscow always wanted, means that Russia will receive sizable transit fees, attain price markup by reselling the fuels it buys from Central Asia to third countries through Russian or Russia controlled pipelines, as well as have more oil and gas with which to secure greater leverage in international politics. Yet Russia’s energy strategy in Central Asia is an integral part of that instituted and implemented globally, both have undergone significant changes in the context of radical economic restructuring in the last two decades. Over the same period, the fundamental rationales – under which activities of Russia’s domestic energy sector are organized – two diametrically-opposed phases stand out: that of decentralized neo-liberalism in Yeltsin’s Russia, neglecting broadly the resource-rich Central Asia, and the phase of renationalization emphasizing state control of all strategic sectors[5], notably oil and natural gas, during Putin’s reign. In parallel, there were two major events which strongly shaped Kremlin’s energy strategy on Central Asia and the world: the 9/11-event and the sudden and persistent upsurge of world oil price since 2003 as the watershed triggering Kremlin’s determination to reclaim its traditional sphere of influence.

It may be noted, in the first place, that after Soviet Union dissolution the centre-periphery relation of the Commonwealth of Independent States (CIS) has changed from one based on hierarchy to that of equal partners. But Kremlin’s aspiration in keeping Central Asia as its traditional sphere of influence hardly dissipates. The upheavals that took place on and after 9/11 have sent shockwaves across the world and broke the delicate balance of power also in Central Asia. To uproot the Taliban that supposedly sheltered Osama bin Laden – the necessary villain held as having set ablaze the WTC twin towers in New York leaving a pile of ashes behind – Bush-junior declared the so called “war on terror” and launched full-scale attack on Afghanistan without delay[6]. Massive buildup of military facilities and airspace bases in Kyrgyzstan, Kazakhstan, and Tajikistan resumed, after the US-led invasion and occupation of Afghanistan back in 1997. Russia as a supreme arbiter of all ex-Soviet affairs began to feel the impinge as never before – especially in its vulnerable South. Perception of increased security threats has reinforced Kremlin’s determination to draw a bottom line: firstly, to maintain Russia’s relative geopolitical superiority in the thinly-veiled new Central Asian Great Game waged by US, and secondly to defend and expand the energy base of Russia’s economy in Central Asia and the Caspian, insofar as the energy complex is the paramount muscle-building machine of Russia, and thirdly, Russian oil and gas monopolists believed that it would be better to “allow” the delivery of energy resources to China than to “break” the delivery monopoly towards Europe through Russian territory or pipelines controlled by Russia; the Eastern direction of exports of Central Asian resources did not violate the transportation monopoly of resources through Russia in a westerly direction. The objectives are interconnected: revival of Russia’s power and prestige are conditional upon control of Central Asia’s underground mineral wealth much as enhanced geo-economic lever would be instrumental in securing access to energy and mapping of the Central Asian pipeline network.

Moscow’s main political goal is to maintain a wide range of influence in the former Soviet Republics, which it labels as “near abroad” (“ближнее зарубежье”). In addition to build and institutionalize relations with Central Asian political leaders, Russian government also employs legal and commercial means deemed necessary (a) in ensuring that Russian firms participate in developing the region’s natural resources and that Central Asian oil and gas exporters continue to use Russian pipelines, (b) in minimizing the involvement of US and European companies in joint ventures formed with their Central Asian counterparts, (c) in scaring off potential competitors by announcing or constructing alternative pipelines conducive to Russia dominated overland energy transport[7], (d) in splitting “western” power through energy diplomacy thus augmenting the energy dependence of the European Union upon Russia and less on the US, (e) as a complement to (d) in fostering selective bilateral ties with Central Asian governments within the setting of comprehensive multilateral security umbrella[8] and so on.

Apart from the above, there are also events of force majeure in origin with outcomes that neutralize endeavor aiming at divert energy transport routes away from Russia. The 5-day conflict in 2008 over the status of South Ossetia and Abkhazia revealed the insecurity of the transit corridor through Georgia with detrimental effects on Central Asia’s balanced diplomacy initiative (Vlassov, 2008) and on Kazakhstan’s pipedream (Kassenova, 2009) of which as a result the collective endeavor to chart westbound crude export corridor – the Kazakhstan Caspian Transport System (KCTS) – other than the Russian controlled routes suffered, due to the incalculable investment and transport risks involved[9].

At present, Russian firms and business groups control much of the transportation infrastructure for Central Asia’s oil, gas, and electricity towards north and west. Lukoil, Gazprom, Transneft and Inter-RAO-EES have invested heavily in various energy production and transportation projects in Central Asia. The abrupt cutoff in January 2006 of Russian natural gas deliveries to Ukraine – to force a price rise – demonstrates how the Russian government can use its control over these enterprises to curtail oil and especially gas deliveries from both Russia and Central Asia to recalcitrant purchasers. Since then disruptions in the Euro-bound gas pipeline have caused alarm to entities on both ends of the supply chain and those in between. Along the chain all parties are concerned with energy security but the term has different meaning to those affected, whether they act as exporter, importer, transit country, or a combination of the above, respectively.

Russia, unifying all the above three roles in one, would be strongly motivated to buy oil and natural gas from the Central Asian producers, resell at large mark-up price to distant consumers in Europe and Asia. For the European importers Russia can also exploit its pipeline monopoly to prevent supplier countries from exporting energy products, as Gazprom did in 1997 with Turkmenistan’s natural gas. Even the Baku-Tbilisi-Ceyhan (BTC) pipeline which bypasses Russian territory, is unlikely to threaten the political and economic influence Russia derives from its pivotal role in Central Asia’s energy networks directed towards Europe. Although Russia’s diminished economic and military resources make it unlikely that it will soon recover the hegemonic status Moscow enjoyed in Central Asia during the Soviet era, there is a variety of instruments which may be employed to promote its regional objectives and to remain the most important actor in the Greater Central Asian region.

China: Being one of the four poles, China made a powerful entry onto Brzezinski’s “grand chessboard” (Brzezinski, 1998), together with other world majors in oil and gas business since the early 1990s’. The heartland of the keenly-contested chessboard is Central Asia. Chinese government first saw opportunities in the geopolitical vacuum left over by Kremlin, but soon realized that it had to confront the resurgence of competing interests of regional actors: such as Turkey and Iran, – and growing American presence (Bates & Oresman, 2003). However, US involvement in the region has not been viewed entirely skeptically. For example, in the eyes of Beijing and Moscow “war on terror” launched by Bush-junior after 9/11 coincides with one of the expressed aims of the Shanghai Cooperation Organization (SCO) co-chaired by the two, in particular to fight “extremism, separatism, and terrorism” in Eurasia, but that is perhaps the only common ground they share with Washington. For the rest, principally the US “monopoly in world affairs” (De Haas, 2008), continued intrigue in toppling the Central Asian rulers, in establishing permanent US-military presence in the region[10], in usurping Tbilisi as the frontline anti-Russia platform in South Caucasus, etc.

To compromise the diverse aspirations of major players and their local agents Beijing has taken a measured step centering upon deepening energy as well as economic cooperation with its Central Asian counterparts. Premier Li Pong, on his maiden visits to four Central Asian capitals in April, 1994, coined “mutual trust, mutual benefit, equality and coordination”[11] as the hallmark for building friendly relations at two levels, bilateral as well as multilateral. In essence, this and subsequent chains of official statements on regional and world issues are reminiscent of the “Five Principles of Peaceful Co-existence” originally set forth by premier Zhou Enlai at the first Conference of Non-Allied Movement convened in 1954 in Bandong, Indonesia[12]. To silence widespread and largely fabricated fear of “China threat”, notably after the new century, Beijing reverted instead to “Peaceful Rise” as the official position on China’s development path.

Tempted by lucrative trade with China, Central Asian republics cede increasing mineral rights to China’s state-owned enterprises: such as state-owned CNPC and Sinopec, – and agree to build cross-border pipelines (Ong, 2005). To shed light on this topic there are numerous cases meriting close examination. In what follows reference is made only to some limited aspects of the widely-discussed pipeline project Beijing collaborated with Astana.

In 1997 China and Kazakhstan concluded a pact forming the Sino-Kazakh Oil Pipeline Co. Ltd. (KCP), a joint venture between CNPC and KazMunaiGas which had, as its declared goal, a pipeline running from the Caspian Sea to Xinjiang (Xinhua, 2005). The eastern section first started pumping oil in May 2005 from the Kumkol field of the Aktobe region, making it the first pipeline to transmit crude directly into China. On October 27, 2005, China made its first major foray into the Central Asian oil industry when the CNPC purchased the Canadian-based PetroKazakhstan Inc., owner of the Kumkol field (Chinese Embassy, 2005) but China paid well over market value and was forced to sell a third of its holdings in the Kazakh state oil company KazMunaiGaz back to the government as part of the deal (Pala, 2006).

When completed at the end of 2009, the Sino-Kazakh pipeline has ultimately 20 millions ton/year capacity, about 10% of China’s total crude imports 2009. Crossing the border at Khorgos the pipeline carries crude to a refinery at Dushanzi 246 km away. KCP was also designed to transport Russian crude, thus laying the base for trilateral pipeline cooperation. The question is whether LUKoil, owner of half of North Kumkol’s exploration and production license acquired from the Kazakhstani government in 1995, would use “oil weapon” to further state interest. By the end of 2006 LUKoil managed to own the legal rights of the entire area of Kumkol North after first using litigation to drain CNPC tens of millions of dollars. Russia’s geopolitical lever matters for China for two reasons: first, Kumkol field is the primary local supply source feeding the Atasu – Alashankou pipeline (i.e. prior to completion of the entire KCP running from the shore of Caspian to China); second, the Shymkent (or Chimkent) refinery that is associated with the Kumkol field is connected to the Soviet-era Omsk-Pavlodar pipeline, officially named as Central Pipeline Consortium/CPC, controlled by Russia’s Transneft. This means that Transneft combined with LUKoil have the option to regulate the volume of crude movement between CPC and KCP (Marten, 2007). After all Russia did not oppose the construction of the “Sino-Kazakh Pipeline” (Sheives, 2006) virtually because it has only symbolic meaning not palatable damage on its grip on Central Asian pipeline. On the other hand, Washington saw China’s advance as a threat but less harmful as long as it reduces Russia’s domination on pipeline[13].

Dismissing conceivable Russian sabotage, at bilateral level, the major advantage accruing to both Kazakhstan and China may be seen in the fact that: a) KCP provides a direct transport route between two neighbors devoid of border disputes (completely resolved in 1997); b) there is no charge on transit fees; c) no third country can hold Kazakhstan’s oil hostage by arbitrarily raising fees or blocking the pipeline; d) Kazakhstan is guaranteed a reliable export outlet for its superabundant oil reserve much as China a stable supply to sustain its high growth momentum. Nevertheless, there are minor disadvantages as well. On this pipeline China acts as a monopsony; the majority of the oil comes from the Caspian fields or even the massive Kashagan field, a high-pressure field with large quantities of poisonous hydrogen sulfide located in the shallow northern Caspian Sea which freezes in winter (EIU, 2007, p. 28), so China could not avoid the temptation of pressing prices down. On the other side also Kazakh government, having regained majority control on Kashagan from the ex-operator Agip KCO led by the Italian company ENI, is free to mediate oil flows to China at buyer’s risks. The majority of the other Caspian fields such as Tengiz, owned by TengizChevroil, a joint venture between the Kazakh government and Chevron, might be under pressure to sell its crude through American-sponsored BTC or via the Caspian Pipeline Consortium (CPC), of which it is also a shareholder (Fishelson, 2007). For both Beijing and Astana, the interesting question to ask would be whether their “strategic partnership” can survive insecurity consciousness, especially for Astana.

Sino-Kazakh energy cooperation has been taking place according to the terms set out in the official framework agreement, coordinated by enterprises of the two countries responsible for project initiation and execution. In reality pure bilateralism may not stand on its own. Astana prefers seeing all encroaching powers, China included, play off against each other, so as to withstand being taken hostage or save the transaction costs required in warding off potential external security threat. Irrefutably, to unravel what could lie behind the Kazakhstan’s balanced “multi-vector diplomacy” tight conceptual scrutiny[14] is called for. As a mirror image, incoming powers may also intentionally balance out their own influence with each other into a multilateral cooperative-competitive framework. In theory, this presupposes that the collective positive gain would be greater provided neither of the two (Russia and China) adopts interest maximizing energy diplomacy disregarding the interests of its competitor[15].

On natural gas, China has separately and jointly reached agreement with Turkmenistan, Uzbekistan and Kazakhstan in building cross-border pipeline. The result is the “Sino-Turkmenistan” pipeline or more accurately the “Central Asia-China Gas Pipeline” (CACGP). The project was first discussed between Chinese President Hu Jintao with his Kazakh counterpart on his visit to Astana in June 2003, joined by framework agreement signed with Turkmenistan (2006) for long-term gas supply and pipeline construction, and with Uzbekistan for (2007) on building the Uzbek section of the pipeline[16].

USA: Twenty years after the end of Cold War, the United States is still the lone superpower capable of striking at remote villages anywhere around the globe. It is also in disposal of considerable political and economic leverage in shaping world financial market, charting borderlines, redrawing the energy map and pipelines, etc. However, onto the southern fringe of Central Asia and Caucasus—the vulnerable underbelly of Russia – it has met resistance; the shared perception of security threat posed by the US has prompted Beijing and Moscow to coordinate their policies with local allies. Sharpening standoff among the quadrilateral poles surfaced as a result, attended by the interplay of a multiplicity of second-tier powers of varying mindset in Eurasia. In geopolitical terms, policy makers in Washington were unambiguous in their support for building multiple pipelines for Caspian oil and gas and for supporting American energy groups playing a significant role in the Caspian. The strategic goals which propel growing US presence in the region are self-evident: to excel in the “collective game” over its rivals, real or imaginary.

With a view to fill up the power vacuum after Russia’s unprecedented retreat, U.S. president George Bush and his three successors mounted large scale expansion all the way from Iraq (1990, 2003), Caucasus (1994), Balkan (1997), to South and Central Asia (1997, 2001, 2009), along the crescent-shaped beltway encircling what British political geographer (Mackinder, 1904) dubbed as the “geopolitical pivot of Eurasia”[17]. The situation didn’t change much under the reign of Barack Obama who is prosecuting the same policy, but with “smiling face” and trying to do all the “dirty” jobs with someone else’s hands. As the 9/11-event unfolded, overtime Washington’s hegemonic design on Central Asia became all the more apparent. The year 2001 witnessed Pentagon’s renewed endeavor in smashing Taliban (heralded by Northern Alliance forces) after firstly invaded and occupied Afghanistan back in 1997 (in retaliation of Al-Qaeda’s suspect bombing of the American embassy in Kenya and Tanzania (Escobar, 2002)). This and the chain of prior military and diplomatic maneuver ultimately brought the U.S. as a distant maritime power to the gateway of Central Asia. Needless to say, these efforts can be justified only for one reason: the subjective desperate desire to remedy one of its fatal loopholes in accessing energy resources: “geography” (Olcott, 2005, p. 332).

Short of direct military intervention, to attain its strategic goals the U.S. has all measures for subduing the Central Asian rulers. One of the standard practices of the U.S. intelligence services is to sponsor “democratic” reforms through the so-called “color revolutions” in what it sees as authoritarian regimes and replace them with pro-US proxies. Counting on their local agents for navigating regime change is the rule. In so doing it aims also at eliminating the influence of Russia and containing the growth of China (Weitz, 2006, p. 161). The “tulip revolution” in Kyrgyzstan in 2005 was the first to touch the nerve of the ruling house in the region. Other potentially subversive tactics include the use of tying aid, intelligence and military collaboration, media, humanitarian programs, education, NGOs, etc. These are viewed with suspicion to some extent by locals, with aggressive “democracy” promotion regarded as “the greater threat to the region’s ruling elites, who fear that they are targets for ouster” (Olcott, 2005, p. 331)[18]. But there is one area which receives overwhelming support from Central Asia: pipeline diversification. The answer was the US$4 Billion, 1,760 km BTC oil pipeline.

“Inaugurated in July 2006 after the project’s initial conception in 1999”, Piskur (Piskur, 2006) writes, “the BTC is the world’s most expensive and second-longest pipeline. It runs through American-ally Azerbaijan and post-“rose revolution” Georgia (both GUAM members), proceeds around Russian ally Armenia, passes near six ongoing or potential war zones, before ending at the Turkish port of Ceyhan, just besides the American airbase at Incirlik” (Escobar, 2006, p. 42ff.)[19]. For natural gas, the U.S. is working hard to ensure that a new transport route – the Nabucco Pipeline – initiated by OMV of Austria and BOTAŞ of Turkey in 2002 will materialize (see Figure 2). Aimed at breaking Russia’s monopoly, this equally costly project (estimated at US$ 12.3 billion, (Reuters, 2008)) is designed to carry natural gas from Shah Deniz field of Azerbaijan to Baumgarten of Austria; it travels over a total length of 3,400 km and trespasses six countries en route. Nabucco is rated highly by the European Union for two reasons: on the one hand, it is a diversion from the traditional troublesome Northern route via Ukraine and Poland – which still pumps about 80% of the gas EU imported from Russia – and hence immune from possible disruptions in gas supply to consumers in Europe; on the other, because major gas producers as Iran, Iraq, Turkmenistan, and Egypt may be included as new sources of supply[20]. But so far the outlook of this project is not entirely clear; “western” powers (EU and US) have been unable to organize a united front capable of withstanding the multifaceted pressure from Moscow. U.S. vulnerability, in particular, may be accessed through several perspectives.

Back to the game Round-II (time after 9/11)[21], it is worth noting that the lack of an integrated framework under US leadership to combat terrorism has compelled the U.S. to rely exclusively on bilateral ties, therefore limiting the scope of region-wide cooperation (Rumer, 2006, p. 150). Revolting against NATO’s presence, during the SCO summit in 2005, Russia and China helped nudge Uzbekistan and Kyrgyzstan to demand that the North-Americans close their Afghan-supplying bases in each country. Uzbekistan followed through, kicking the US out of K2 base, but Kyrgyzstan let the US stay at Manas. Sensing that the SCO was gathering traction, Washington had sought observer status at its summit meeting in July 2006, but was turned down. The SCO has also been employed by its members, and its observers (Iran), as a forum to criticize the U.S. foreign policy, especially regarding democracy promotion and missile defense systems in Eastern Europe. Needless to say, the Sino-Russian partnership, the growing importance of the SCO and its consolidating control over Central Asian energy policy is deeply worrying political leaders in Washington[22]. Nevertheless, the United States have still made significant incursions into Central Asian geopolitics and geoeconomics.

At the energy level, the Russia wasted no time in leveling counter-attack to both the BTC pipeline and the planned Nabucco. Various offensive measures have been outlined or undertaken in frustrating the US attempt to dictate the primacy of the transportation route. To the “western” industrialized countries the most provocative agenda ever proposed by Putin’s Russia was the creation of an Energy Club within SCO in 2006 and an OPEC-type world gas cartel in 2007 (Blagov, 2007), now called Gas Exporting Countries Forum (GECF). Whereas these do not pose any immediate real threat to energy security of the US, EU, and also China, their undertone is unmistakable: Kremlin is still capable of launching full-scale energy pressure with extensive detrimental consequences: before Medvedev’s 4-years lasted “i-phone-mania” Russia’s gas giant Gazprom was rapidly consolidating its control on the gas industries in Turkmenistan, Uzbekistan, and Azerbaijan.

To summarize, US influence in Central Asia has increased over the last several years but still is very limited in terms of support it receives from local leaders. This may be attributed to the “geopolitical context, the authoritarian nature of the local regimes, cultural norms and historical legacies that are very different from the US and the lack of structures favorable to the penetration of capitalism” (Boyer, 2006, p. 97ff.). It shows, at least in the short, that aggressive democracy promotion in Central Asia would both fail and harm U.S. interests (Weitz, 2006, p. 161). In fact, the lesson learned from the “color revolutions” from Georgia, Ukraine, and Kyrgyzstan is negative. Some authors argue, therefore, that local regimes have used the entrenched bilateral relationship in the “war on terror” by “exaggerating the terrorist threat” to justify “repressive measures” on their population (Boyer, 2006, p. 101f.). The result is counterproductive especially when the issue of power succession is taken into account because it is exactly one of the biggest political challenges to Central Asian leaders since their rise to power (Rumer, 2006, p. 148f.). The possibility of anti-US axis taking place around the Sino-Russian strategic partnership spells out the fact that the lone superpower is unable to achieve its goals on its own, at least if it follows its current approach.

Central Asia States and Azerbaijan: In modern era, the significance of Central Asia may be appraised either from the perspective of geopolitics, or of geoeconomics, or of both. Russia and China, are in a way partially Central Asian states, and both have regions inhabited by Turkic- and Persian-speaking minorities. Geopolitical considerations warrant the inclusion into Greater Central Asia such secondary or peripheral state actors as Afghanistan, Caucasus countries (Azerbaijan, Armenia, Georgia) and Mongolia, regional powers such as Turkey and Iran that are culturally and linguistically tied to the region, even India and Pakistan, as the most populous but fossil poor states in the South, could be regarded as partially Central Asian states. Understandably, not all the above listed countries claim significance in both geopolitics and energy supply; further, only a handful of them are thematically linked with and home to the twisted quadrilateral game Round-II (after 9/11-events till now). They are countries of the «second tier». Survey of these selected few continues as below starting with Kazakhstan.

Kazakhstan. At the dawn of independence, Kazak President Nazarbayev opted straightforwardly for a “multi-vector” approach in foreign policy stressing diversification in the export outlet of liquid fossil (Nurbekov, 2009). Kazakhstan’s leadership in Central Asia and thus ambitions for sovereignty have been boosted by its rich oil and gas reserves. In fact, Astana regards itself as a major regional player, attracts investments, and creates new partnerships for moving crude oil bypassing Russia (EIU, 2006, p. 20). Note in this connection that at the beginning of Kazakhstan’s independence, all of its oil was transported to Russia via the transnational CPC (Caspian Pipeline Consortium) pipeline—a decade and a half later, about 80% of its oil goes into the Russian pipeline system, and the rest – to China via the Atasu – Alashankou pipeline. Blueprints on transporting oil to Europe (via the Russian-controlled TBP, Trans-Balkan Pipeline) and to Iran (via Turkmenistan) are under negotiation. Kazakhstan has also declared its intention to export Kashagan oil to BTC after 2013 (EU News, 2009). Parallel plans for transporting gas to Europe (via the Russian-controlled South Stream), to Europe (via the US-controlled Trans-Caspian Gas Pipeline (TCGP)), to Turkey (via South Caucasus Pipeline), and to Russia (via the Russian-controlled Prikaspisky Pipeline for connecting the South Stream) are being discussed as well, where South Stream and TCGP are in direct competition with each other[23].

Turkmenistan. The recently-completed gas pipeline linking Turkmenistan with China clearly indicates that Ashgabat is equally enthusiastic in pushing for market diversification as Astana. Between Nabucco proposed by Austria as an alternative to the Russia’s gas pipeline South Stream, President Gurbanguly Berdimuhammedow shows some preferences for Nabucco through Azerbaijan[24] and to the Iranian port of Neka. Turkmenistan, as a neutral state guaranteed by UN resolution, adheres consistently to non-alliance principle in foreign policy. In selecting foreign partners for taping its huge fossil riches and in fixing the routes for export, Ashghabat has adopted the same balanced approach as Astana[25]. These outcomes have thus far kept Moscow in jeopardy, despite that at least in the short-run it remains to be the dominant force in dictating the development of the pipeline system originating from Caspian Central Asia (EIU, 2006, p. 16). For a comparison of the planned route of Nabucco and the Sourth Stream, see Figure 2.

Azerbaijan. Azerbaijan, on the other hand, managed to involve more US interests in prospecting and drilling of hydrocarbon resources immediately after independence[26]. Due to its unique geographical location, Baku has to a large extent been insulated from the frictions between Kremlin and its Central Asian junior brothers on the issue of routing of pipelines[27]. There is also an added advantage, it has accumulated century old experiences in hosting foreign ventures, both on land and offshore, in commercial excavation of oil (Yergin, 1993), thus contributing to rapid depletion of unexplored reserves (EIA, 2009). The newest test of political orientation to Baku is of course Nabucco.

From the viewpoint of transport logistics, whether Nabucco finally emerges, the gate-keeping role of Azerbaijan surely has to be reckoned with. But so far Baku has refrained from making a decision because it is not yet prepared to face possible backlashes from Moscow and Teheran by siding with the US and/or EU. Its reluctance is compounded by the fact that Moscow has proposed a logistically much superior rival pipeline known as South Stream (Gazprom, 2009). Decision makers in Baku are caught in a paradox because they always want to strengthen military ties with the US, acquire EU membership, but hardly find it necessary to annoy Moscow. Second, Nabucco, like BTC, is primarily a political undertaking which ranks low commercially compared to the Russian-proposed South Stream (Ismayilova, 2008). Third, the plan to build Prikaspisky pipeline, a feeder line linking gas supply of Turkmenistan and Kazakhstan with Russia (see e.g. (Gorst, 2007), (Lucian, 2007)), has been formally rectified (Reuters, 2009) as an alternative to the EU-sponsored underwater Trans-Caspian Pipeline (TCP), (Ismayilov, 2007). Fourth, Moscow repeatedly assures Central Asian exporters it will buy all their gas at market price for delivery through Russia-controlled pipeline to the EU (Bhadrakumar, 2008), the exporters’ profits are guaranteed. And finally, Moscow is hinting at possible concession (at least on paper) to Baku’s position on the Karabakh conflict, if Azerbaijan modifies the US-orientation of its foreign policy and energy export (EDM, 2008).

Turkey. One equally important actor on the Caspian energy transport corridor is Turkey. For both BTC and Nabucco the role of Turkey as an indispensable transit country is most obvious. Ankara entered into a pipeline transit agreement on Nabucco with the EU in 2009. Bulgaria, Romania, Hungary and Austria – designated as transit countries – also signed the agreement after years of delay due to a policy dilemma involving Moscow (Katik, 2006), giving the 7.9 billion euro project a major boost. For Turkey, strengthening its bargaining lever as an energy hub for the EU and enhance its EU membership bid sounds plausible. Nevertheless, no concrete supply deals have yet been signed for Nabucco, which plans to pump 31 bcm to Europe by 2015. So this project still has to face the problem of finding sufficient throughput for the pipeline.

Iran, India, Pakistan: The description of the New Great Game and its two tiers would be not fulfilled, if such countries as Iran, India and Pakistan would not be shortly mentioned.

Iran. Sitting on enormous mine fields Iran owns 15.8% of the world proven gas reserves (29.61 trillion cubic meters). Some geological studies suggest that an extra 9 trillion cubic meters finding to be confirmed. In terms of proven gas reserves, the country takes the 2nd place in the world, yielding only Russia. Iran is also a major natural gas exporter but lack of investments due to US sanctions since 1995 (under Clinton presidency) which have curtailed both production and export. Yet it belongs to the group of so called “gas energy balance” countries where the share of natural gas in total primary energy consumption is about 50-80%. Surrounded by Caspian Sea, Central Asia, and Persian Gulf, on the hand, and between the principal Eurasian energy consumers (European Union and China) on the other, this country is superbly located both geographically and strategically. The country not only has the possibility of shortest connections to traditional and emerging energy markets, but also can become important transport knot for the Central Asia’s gas stream.

India. India is one of world’s fastest growing economies at present. Over the last decade  India’s GDP grew over  an annual average of 6~7%.  And for the very same reason India takes the fifth place in the world on energy consumption, and by 2030 is expected to consume more than Japan. At the same time India has very small amount of energy resources (end of 2009: 0.4% of world’s proven oil reserves, 0.6% of world’s proved natural gas). In 2008, Indian Minister of Petroleum and Natural gas signed up for the Turkmenistan gas pipeline – i.e. the “Turkmenistan-Afghanistan- Pakistan-India” (TAP or TAPI with Indian participation) – after watching for well over a decade and resisting all inducements to join it, even the blandishments of the US. But so far TAPI looks more like a pipe-dream as anticipated. The same happened to “Iran-Pakistan-India”(IPI) or “Peace Pipeline” (see Fig.3) as well for reasons that are not totally incomprehensible: (a) Delhi is currently developing LNG and nuclear projects at home through Russian technical assistance; (b) India’s long, strong alliance with Russia allows for Indian investment in gas blocs in Siberia, such as Sakhalin-I, (c) it has to be careful of the sensitivities of Russia’s preference on pipeline options between TAPI and IPI (Latha, 2008); and (d) Indian government also has serious reservations about the viability of TAPI due to differences of opinion on tariffs of gas and transit fees charged, credibility of Turkmenistan’s gas reserve, and security of transport through rebel-controlled territories in Afghanistan and Pakistan. So although India has not officially quit the project it is uncertain if the one or the other pipeline will be back on the agenda.

Pakistan. Like India, Pakistan’s domestic gas production is falling and import dependence growing tremendously. According to one report, in Pakistan only 60% of households have electricity and 18% access to pipeline gas for heating. Energy demand is expected to increase 250% over the next 20 years. For this reason, Pakistan is working hard to address the issue. In 2008, President Zardari negotiated with the Chinese on hydel projects in underdeveloped areas of the north. It is in the meantime intent on moving forward with the IPI, IP (without India), or IPC (China replaces India) (see Fig.2) regardless of pressure from the US. As planned, the IPI is expected to run over 2,775 kilometers from the Persian Gulf in Iran, through Baluchistan to a port in Karachi and then north to New Delhi. The gas-pipeline project—the (TAPI) carrying gas from Daulatabad in Turkmenistan via Herat and Kandahar in Afghanistan to Multan in central Pakistan is one such alternative and not entirely a competitive or rival project.

Figure 2: Planned Route of TAP, IPI Pipelines
Source: Journal of Energy Security, 2010

figura2

Pipelineistan: An unforeseen twist in the East-West relation took place following spontaneous and unexpected breakup of the former Soviet Union. As a result the thinly-veiled fault line that used to exhibit relative tranquility in the region began to undergo dramatic changes together with revival of the Great Game. The heart of the matter is “pipelineistan”, a term invented by Escobar for describing “the golden future (for world oil majors, authors): a paradise of opportunity in the form of US$5 trillion of oil and gas in the Caspian basin and the former Soviet republics of Central Asia” (Escobar, 2002). From land-locked Central Asia pipelines are the only technically viable means for transporting liquid fossils to the world market. Great fortune await the age of Pipelineistan especially for Iran and energy-starving Pakistan, Afghanistan, India, and other countries of the region. Rivalry between Kremlin and US-backed vassals in the Caucasus intensified in the wake of Soviet demise and consequential strategic vacuum in the region. The golden opportunities arising from growing intra- as well as extra-ethnic tensions fueled by centrifugal forces from ex-Soviet republics were exploited by an assertive US administration which resulted in an unending stream of man-made disasters, from Tajikistan, Afghanistan, Fergana valley, Armenia, Azerbaijan Chechnya, Georgia all the way to former Yugoslavia[28]. In the meantime Pentagon and oil conglomerates collaborated and mounted a devastating organized crime targeting the Muslim world, camouflaged under the “war against terror”, “Infinite Justice”, “enduring freedom”, and now “Arab spring”. It is of no coincidence to find that the asserted “map of terror” in Central Asia (and Middle East) is practically interchangeable with the map of oil and gas and very close connected to gas and oil pipeline transportation networks. A quick look at the map is all it takes[29].

A Synthesis

Post-Soviet Central Asia suffers from the threat of a host of turbulences of diverse origins: localized conflicts, uneven economic distress, drugs and arms trafficking, environmental disasters. Ethnic tensions, in particular, simmer beneath many «fault lines», leaving the region susceptible to instability and encroachment of forces that have root in «separatism, radicalism, and extremism»[30]. Akin to the shadow of the classical tournament this region is now plagued by tensions arising from increasing power buildup, both within and beyond.

The new “Great Game” in Central Asia has been going on for nearly two decades among a broad spectrum of state and non-state actors. Of the four poles, China and Russia correspond with each other the most, however, covering a variety of regional policies for one important reason: they are pregnant with the vision of multi-polarity in world affairs (Walsh, 1993, p. 273f.). Oil and gas loom as the cornerstone of their common initiatives, even if they have different or even competing goals in the region (see e.g. (Jonson & Allison, 2001); (Bates & Oresman, 2003)). By contrast, the European Union expresses greater interest in energy security than how it may be satisfied, intend on including Iran as potential gas supplier through Caspian pipelines that bypass Russia, a position Washington objects strongly. To perpetuate its hegemony the US is strongly motivated to liquidate Russia’s rule in Central Asia, , restructure Eurasian space according to own interests preventing China’s or Europe’s rule there, build military bases, progressively tighten their grips on Central Asian minerals and the pipeline infrastructures, aim at eventually crowding out Russia’s influences and curbing China’s rise.

The four poles (Russia, China, US, and EU) are actors of the “first tier”. They are interacting with actors of the “second tier” formed of hydrocarbon exporters or transit nations the latter are mainly located in the west of the Caspian Sea. Depending on the routes of pipeline, transit nations have different bargaining power with respect to the options available. Of the south-eastern route, Azerbaijan and Turkey stand out after Iran as logistically the most critical gate-keeper that may block or accelerate the flow of oil and gas to Europe[31]. Turkmenistan is enthusiastic in pushing the diversification of markets for its energy. For pipelines going east or north, Kazakhstan guards all transport corridors to China and Russia in addition to the great promise it holds as a major oil producer and exporter.

In the course of our analysis, we hope, the problems of Central Asian energy exports (oil and gas) became much clearer: they have to come in into a pipeline network world where some fluid balances have persisted since the Soviet Union era and their coming will undoubtedly change these old balances. Also, much clearer became the fact that the actual problem of the envisaged pipeline network entering is not the absence of pipelines, but the absence of energy resources themselves. Not the question: how the energy resources will be transported, – but the question: who will get the Central Asian energy resources, – is the main question to understand and to solve. This is the actual problem of Central Asia: who will get its rich energy resources.

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[1] Post-Soviet Central Asia is generally considered as the region comprising Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. In this study Kyrgyzstan and Tajikistan are not considered as they are both resource poor and disconnected with the region’s pipelines system. Azerbaijan, on the other side, will be taken up due to the significant part it plays in both production and Europe-bound pipeline transportation of oil and natural gas.

[2] The R/P ratio is a common measure showing the “resource abundance” / “resource scarcity”; it is reserves that remain divided by annual production in a given year, the result is the number of years remaining reserves would last (provided production continues at current rate). At yearend 2008, Kazakhstan’s R/P of oil stood at 70, against world average of 42, and Turkmenistan’s natural gas more than 100 against 37.4 of the world’s average. As will be discussed in main text, estimated reserve of the single largest find of the last three decades in the world – Kashagan oilfield of Kazakhstan – tops 13 bbl. With ongoing prospecting and mining of hydrocarbon deposits, the recoverable crude is bound to increase in Kazakhstan as well in other countries in the region.

[3] See http://en.wikipedia.org/wiki/History_of_Central_Asia, last modified on 9 April 2013.

[4] Depending on the types of trade flows there is a wide range of modes of transport to be selected. For oil and natural gas, pipeline is generally considered as the most secure and efficient mean, especially for long haulage, overland delivery volume of which exceeds certain threshold level and lasts over an extended time-horizon.

[5] To safeguard Russia’s geopolitical and national economic interest, Vladimir Putin pushed hard for reconsolidating federal power on strategic sectors only towards the end of his first-term presidency.

[6] “War against terrorism? Not really. Reminder: it’s all about oil”. So contends (Escobar, 2002). “It’s no coincidence” the author continues, “that the map of terror in the Middle East and Central Asia is practically interchangeable with the map of oil”. In fact, the Afghan war was decided long before 9/11; September 11 merely precipitated events. The object was the golden future portrayed by “pipelineistan”: the US$5 trillion of oil and gas in the Caspian and the former Soviet republics of Central Asia.

[7] To strengthen its grip on European gas markets and head off a US-backed pipeline project, Nabucco, that would bypass Russia, Moscow wants to use “North Stream”, the 1200 km twin pipeline that would carry a total of 55 bcm from Russia’s port of Vyborg to the German port of Greifswald. Construction of the euro 7.4 billion started in 2010, with the first pipeline ready for delivery in 2011. This pipeline is built without crossing Ukraine and Poland, the transit countries with which Moscow has had odds for years over Russian gas destined for the European market. For example, in January 2009 Moscow cut off gas supply via Ukraine for two weeks and caused uproar. A mirror project “South Stream” will be built as a rival to ward off Nabucco. See (Rising, 2009).

[8] Several regional organizations have been formed which include: militarily – the “Collective Security Treaty Organization” (CSTO), economically – the “Eurasian Economic Community” (EurAsEc), and the functionally more hybrid “Shanghai Cooperation Organization” (SCO) in which China takes part as the key condominium partner.

[9] Russian controlled routes include the Caspian Pipeline Consortium (CPC) connecting Tengiz oil field with the Black Sea terminal Novorossiysk, the onshore pipeline Prikaspisky, and the planned South Stream.

[10] US-Russia relations are strained over more issues including the deployment of an American missile-defense system in Central Europe and NATO-supported military and political penetration in the Middle East and Northern Africa.

[11] For details see http://news.xinhuanet.com, “Four Guidelines and Six Points”.

[12] ”The Five Principles of Peaceful Co-Existence were: (1) mutual respect for each other’s territorial integrity and sovereignty; (2) non-aggression; (3) non-interference in each other’s internal affairs; (4) equality and mutual benefit; and (5) peaceful coexistence. These were originally derived from talks between Zhou Enlai and Nehru (Geneva) on June 28, 1954, in the signing of a joint statement on the principles on which relations between China and India were to be based. See <http://en.wikipedia.org/wiki/Asian-African_Conference>.

[13] Interview of the US ambassador in Kazakhstan (2004-2008) John M. Ordway, see http://www.usembassy.kz.

[14] But as (Vlassov, 2008) states, “Playing on the contradictions between major players is possible only when all the participants in the game follow the same code of rules. Any aggravation inevitably leads to chaos and to dropping clear principles of interaction, and this may deal a blow to Tashkent, Baku and Astana that have grown unaccustomed to force majeure situations”.

[15] According to the logic of Cournot competition (see e.g. http://en.wikipedia.org/wiki/Cournot_competition) – that could be easily used not only for producing firms, but also for oil consuming countries – the players (firms, buyers, states etc.) have an incentive to tacitly collude, effectively turning the consumer Cournot model into a monopsony.

[16] On 30 August 2007, the construction of the 188 kilometers long Turkmen section of the pipeline begun. This section was built by Stroytransgaz, a subsidiary of Gazprom. Main contractors were China Petroleum Pipeline Bureau, China Petroleum Engineering and Construction Corporation, and Zeromax. Construction of the Uzbek section started on 30 June 2008. It was built by AsiaTransGas, a joint venture of Uzbekneftegas and CNPC. Construction works of the Kazakh section started on 9 July 2008 and the first stage was finished in July 2009. It was built by Asian Gas Pipeline company, a joint venture of CNPC and KazMunayGas. The main contractors of this section were KazStroyService and China Petroleum Engineering and Construction Corporation. The first of two parallel lines was completed early November 2009 and the second line was completed by the end of 2010.

[17] Geographical Pivot of History was an article submitted by Halford John Mackinder in 1904 to the Royal Geographical Society that advanced his Heartland Theory. According to the theory, “[t]he Heartland lay at the centre of the world island, stretching from the Volga to the Yangtze and from the Himalayas to the Arctic”. Mackinder’s Heartland was the area ruled by the Russian Empire and then by the Soviet Union, minus the area around Vladivostok. See http://en.wikipedia.org/wiki/The_Geographical_Pivot_of_History.

[18] Failure to understand those facts resulted in Tashkent (with SCO support) imposing, in July 2005, a six-month deadline on the US to leave the Kashi-Khanabad (K2) airbase in Uzbekistan. That was following “the United States’ critical response to the Uzbek government’s excessive use of force to suppress a violent uprising in the city of Andijan in May 2005”, which was “the final straw that broke the back of U.S.-Uzbek relations”. See (Rumer, 2006).

[19] Piskur (Piskur, 2006) continues ”[t]he BTC pipeline was designed to challenge Russian hegemony over energy in the Caspian Sea region”. For that reason, it bypasses competing (but cheaper, safer and more practical) routes through Russia and Iran. Because the BTC “doesn’t make much sense in economic terms” (Escobar, 2006, p. 46), or security terms for that matter, it is a perfect example of where the line between economics, security and geopolitics begin to blur in Central Asia.

[20] Understandably, Azerbaijan does not have enough gas to feed the pipeline; to make Nabucco commercially viable it is necessary to fill up the pipe with input from other supplier. Recent estimates of the new Yolotan-Osman gas field to between 4 to 14 tcm made by the British auditing firm GCA immediately lifts Turkmenistan’s reserve to the fourth place in the world. To the elation of Europe this new find would lessen the tensions among the receiving ends of the Caspian gas and is likely to keep Nabucco afloat (see e.g. (EDM, 2008) & (Cutler, 2009).

[21] It is quite possible that outbreak of the “Arab spring” in 2011 signals that the US intelligence is no more interested in the establishment of “their” regimes in the countries of Eurasia, but in creating on the big “chessboard” the maximum possible chaos.

[22] Nevertheless, the reason US is not overly concerned about the SCO’s intentions is because the group lacks cohesion and therefore the strong geo-political and geo-economical capabilities. Next, Russia desires to dominate its former vessels and China wants them as markets, energy supplies. These two goals could clash. Lastly, the tangible presence of NATO and the US in Afghanistan and Kyrgyzstan, along with its diplomatic ties and financial assistance are out of the control of the SCO.

[23] See (Kassenova, 2009) for a review of the various pipeline shipping routes from Kazakhstani oil fields.

[24] With designed annual capacity of 30bcm, the Turkmenistan-China gas pipeline is in every sense of the term a trans-Asian gas pipeline as it traverses the territories of Uzbekistan and Kazakhstan before reaching the border town Horgos (Xinjiang). Across the border, TCGP meets China’s second “East-West Pipeline”, which extends all the way to Shanghai and Guangzhou on the southeast coast of China. This pipeline is the longest pipeline in the world (over 10 tsd km).

[25] Following a policy of “positive neutrality”, Turkmenistan is just an observer state in the CIS, and is not a member of any other post-Soviet organization..

[26] Located on the west bank of the Caspian Sea, Azerbaijan is traditionally the most important transit country along the East-West energy corridor leading to southern Europe through Turkey and the Mediterranean.

[27] Evicting Russia temporarily before the October Revolution in Russian Empire (1917~20), Azerbijan was reabsorbed into the Soviet Union and renamed thereafter as Soviet Socialist Republic of Azerbaijan.

[28] The new frontier involving multipolar rivalry extends at least as far as Macedonia in the west to Afghanistan and Chechnya (McFarlane, 2008).

[29] Similar views are as follow: According to one British news media, the “war against terrorism is a fraud…Bush’s concealed agenda is to exploit the oil and gas reserves in the Caspian basin, the greatest source of untapped fossil fuel on earth”. Citing Ahmed Rashid’s authoritative book (Rashid, 2010), George Monbiot states “the U.S. oil company Unocal Corp. had been negotiating with the Taliban since 1995 to build “oil and gas pipelines from Turkmenistan, through Afghanistan and into Pakistani ports on the Arabian sea.” “The invasion of Afghanistan”, he continues “may also be a late colonial adventure.” Ranjit Devraj writes in Asia Times, “Just as the Gulf War in 1991 was about oil, the new conflict in South and Central Asia is no less about access to the region’s abundant petroleum resources,” (Monbiot, 2002). In addition, “if one looks at the map of the big American bases created for the war in Afghanistan, one is struck by the fact that they are completely identical to the route of the projected oil pipelines to the Indian Ocean,” says Uri Averny, a former member of the Israeli Knesset, writing in the daily Ma’ariv in Israel. See (Talbot, 2003).

[30] Based on the communiqué of the founding of the Shanghai Cooperation Organization (SCO, 2006).

[31] Without US sanction, superbly located Iran (Reuters, 2009) would be the best choice for delivering Central Asian oil and gas to the world market, not Europe alone. According to (Karimi, 1998, p. 4), “Considering the excellent security existed in Iran, and also because of the short distance between the Caspian Sea and the Persian Gulf and the lack of natural obstacles and high talent in the oil industries, Iran route is the best way for building oil and gas pipelines in order to transmit hydrocarbon materials of the Caspian area to the world”.

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