CENTRAL Asia is blessed with abundant of oil and gas. The Caspian Sea is rich in oil and gas resources at an estimated $4 trillion. Experts estimate that oil deposits of the Caspian Sea may not be quantitatively comparable to the deposits of the Persian Gulf, but they are still considered of excellent quality and able to provide a significant alternative source of energy in the 21st century.

Deng Xiao Ping`s economic reforms in the post-Mao era, ushered China's average annual growth rate of almost eight per cent. China’s economic security depends on “Three Es,” namely, economic growth, energy security, and environmental protection. Energy security means security of supply - sustainability of access to global energy resources - and security of demand - efficiency of energy consumption and environmental protection. Energy, the key component of China’s overall economic development and its dependence on oil imports is expected to rise to 50 per cent by 2010.

Energy resources are reshaping the geopolitical map in Eurasia. By 2050, Central Asia will account for more than 80 per cent of the US oil. China has been an oil importer since 1996. Xinjiang is expected to replace northeast China as the new energy base. China has focused on the construction of a 4,200km network of gas and oil pipelines running from Xinjiang to Shanghai. Today China accounts for 12 per cent of all world energy consumption, second only to the US at 24 per cent. By 2025, China is likely import 75 per cent of its oil.

In relation to raw material reserves, Central Asia is vital to China as it is second only to the Gulf in terms of oil resources. The primary Chinese role in Central Asia is market-oriented. China provides the Central Asian states vital non-Russian transportation routes through which the states can interact with international markets.

Four considerations provide the foundation for China’s policies toward the CARs in the post–Cold War era: (1) China’s desire for stability on its frontier and border provinces, (2) desire to enhance the economic development of specific inland regions, (3) growing energy needs, and (4) concerns over its relative position in the post–Cold War strategic environment.

The The 1,000-kilometre (620-mile) pipeline links Atasu in central Kazakhstan to Alashanku in western China's Xinjiang province and deliveries are expected to start in mid-2006, with an initial annual capacity of 10 million tonnes

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This stretch of pipeline, jointly developed by CNPC and the Kazakh state energy company Kazmunaigaz, is the first stage of a more ambitious project to link Chinese consumers to the far bigger oil fields of the Caspian Sea.

The bigger pipeline would stretch 3,000-kilometres (1,860-miles) and is aimed to be completed by 2011. — AFP

China National Petroleum Corp. has purchased with $4 billion Canada's PetroKazakhstan, which produces about 150,000 barrels of oil a day. In Uzbekistan, the China National Petroleum signed a $600-million oil joint venture. The trade volume during January and November 2005 between China and Kazakhstan reached more than $6.1 billion. In 2005 Kazakhstan produced 61.4 million tons of oil. Now Kazakhstan appears to be seeking ways to diversify its energy ties and partnerships.

Ashgabat and Beijing took preliminary steps in April 2006 toward the construction of a pipeline linking the two states. Beijing agreed to buy 30 billion cubic meters of Turkmen natural gas annually for a period of more than 30 years, possibly starting in 2009. China provided military and technical aid to Uzbekistan, Kazakhstan, and Kyrgyzstan. At the end of 2004, Beijing signed a $70 billion energy agreement with Tehran. China's state Sinopec agreed to buy 250 million tons of the LNG over 30 years from Iran, as well as to develop the giant Yadavaran field.

As per the China's Foreign Ministry, Saudi Arabia accounts for about 17 per cent of China's imported oil. The Saudi Aramco is already in a joint venture with the ExxonMobile and the Sinopec to build a $3.6 billion refinery and petrochemical complex in China's Fujian Province that will use the Saudi crude. The deals are part of a global search for oil by the China's state-controlled energy giants.

China is executing its "leapfrog strategy in the energy field" that means locking up secure supplies abroad, while radically increasing natural gas facilities, hydro generators, and nuclear reactors at home.

India imports 70 per cent of its oil, and half its gas demand of 170 million cubic meters a day is met internally. China also meets about 40 per cent of its demand from imports. This dependence on imports has forced both countries to bid aggressively for overseas oil assets. China and India have signed five memoranda on energy cooperation in January 2006. Oil and gas are two major components of Pakistan’s energy mix contributing more than 85 per cent to the total fuel share. Pakistan depends mainly on imported oil and demand for oil and petroleum products has grown at an annual rate of five per cent. Around 38 per cent of total supplies to country’s energy mix is met through imported oil. The aggregate requirement of oil is over 400,000 barrels per day. Massive untapped gas reserves are believed to be lying beneath Pakistan's remotest deserts. China has invested in more than 100 ongoing projects in Pakistan. The Chinese involvement in many ongoing projects such as the second phase of Gwadar port, and several oil and gas exploration schemes are of particular significance.

The EIA expects India to more than double its oil consumption to 5.3 million barrels a day by 2025. The annual foreign direct investment (FDI) in India has hovered in the range of $5-$6 billion over the last several years but it is still well below the $50-$60 billion per year of the FDI in China. India’s rivalry with Pakistan has a direct relevance to energy sector, as reduction in tensions could facilitate the regional natural gas and/or oil pipelines.

According to some estimates, India's daily oil imports will rise more than three-fold by 2020, from the current level of 1.4 million barrels per day.

Indian Prime Minister Manmohan Singh has said "energy security is second only in our scheme of things to food security." China's fuel forays in the Subcontinent reflect its global approach. In Pakistan, its ties are rooted in long-term geo-strategic considerations and transportation needs. Conversely, in dealing with India, they are exploration-and-production-driven and have geo-political implications. India's bidding capacity is very poor compared to that of China or other countries.

Today, China is the world's second largest oil importer. By 2025, nearly three-fourths of China's petroleum imports will traverse the Indian Ocean and the piracy-plagued Straits of Malacca.

China is taking interest in turning Gwadar into a transit terminal. In the long-term, a pipeline or alternate land-based route from Gwadar could funnel crude imports to China's Xinjiang region bordering Pakistan. Energy cooperation can fundamentally transform India relationship with Pakistan and China. Experts in the region are talking about the Iran-Pakistan-India pipeline and its proposed extension to southwestern China if that is materialized it will radically transform the relationship between these countries. The extension to China bids fair to allay India’s misgivings vis-à-vis Pakistan. Extending the Iran-Pakistan pipeline from Rajasthan across northern India and the Brahmaputra valley, Myanmar and finally ending in Yunnan thus will foster mutual dependence.

Major powers are taking interest in production and transportation of oil and gas of CARs. The new pipelines for the transfer of oil and gas and the potential economic benefits for the countries in the region may pave way for regional integration and strengthening of friendly relations.

The writer is associate professor, Area Study Centre, Russia, China and Central Asia, University of Peshawar