December 12, 2009 / 9:59 AM / 8 years ago

UPDATE 3-China's Hu boosts energy ties with Central Asia

* Kazakh part of new gas pipeline inaugurated

* China seeks to bolster influence in Central Asia

* China’s Hu also due to travel to Turkmenistan

(Adds Hu quotes, details of other deals)

By Raushan Nurshayeva and Shamil Zhumatov

ASTANA/OTAR, Dec 12 (Reuters) - Chinese leader Hu Jintao opened the Kazakh section of a new Central Asia-China gas pipeline on Saturday, tightening Beijing’s control over natural resources in the vast energy-rich region.

Lying on some of the world’s biggest oil, gas and metals reserves, mainly Muslim Central Asia is at the centre of a geopolitical tug-of-war between China, Russia and the West, all seeking to grab a share of its untapped riches.

On a visit to the Kazakh capital Astana, Hu and Kazakh President Nursultan Nazarbayev pressed a symbolic button to inaugurate the Kazakh stretch of the new 1,833-kilometre (1,139-mile) Turkmenistan-China pipeline.

In the icy steppe on the Kazakh border where the pipeline enters China, officials from both nations hugged and cheered in a separate ceremony shortly afterwards, some waving national flags.

The entire pipeline, running from gas-rich Turkmenistan to China’s restive region of Xinjiang via Uzbekistan and Kazakhstan, will be formally commissioned on Dec. 14 when Hu travels to Turkmenistan for an official ceremony.

“It’s a huge project that will one day restore the ancient Silk Road route,” Nazarbayev told Hu in Astana, referring to a mediaeval network of trading routes that ran across Eurasia.

The pipeline, which starts near a Turkmen gas field developed by China’s CNPC, marks a new milestone in Beijing’s quest for control over Central Asia’s untapped energy resources.

China has already stepped up its presence in the region by handing out billions of dollars in loans, snapping up energy assets and building a separate oil pipeline from Kazakhstan.

“Relations between Kazakhstan and China are developing rapidly in a healthy and steady way,” said Hu, speaking alongside Nazarbayev at the end of his visit. “We have maintained close contacts at the highest level.”

On the sidelines of Hu’s visit, officials signed a range of investment deals, most detailing earlier agreements between Astana and Beijing, in sectors such as steel, chemicals, renewable energy and reconstruction of a Kazakh oil refinery.

As part of earlier deals, China confirmed its intention to spend $3.5 billion to set up joint ventures to develop Kazakhstan’s non-energy sector, part of Nazarbayev’s ambition to diversify the economy and ease budget dependence on oil exports.

NEW PIPELINE

In Kazakhstan for the ceremony and talks with Nazarbayev, Hu is now due to travel to Turkmenistan this weekend for a summit of nations involved in the pipeline project including Uzbekistan’s reclusive President Islam Karimov.

Presidents of Central Asian nations, at odds over such issues as cross border electricity and water use, rarely meet to discuss cooperation, limiting their contacts to Russia-organised regional summits.

With capacity of 40 billion cubic metres (bcm) a year, the new pipeline will ease Turkmenistan’s dependence on Russia, which purchased about 50 bcm a year before the two nations fell out over gas supply terms this year.

Russia’s Gazprom (GAZP.MM) stopped buying Turkmen gas in April after a pipeline explosion sparked a broader diplomatic row over gas. The move has cost Turkmenistan about $1 billion a month and prompted it to forge closer ties with other nations.

Russia and Turkmenistan have yet to agree on supply terms. As gas diplomacy heats up, Russian President Dmitry Medvedev is due to travel to Turkmenistan later this month for energy talks.

China, for its part, has helped Turkmenistan partially offset the losses by giving it a $3 billion loan to develop the South Iolotan field, one of the world’s five largest natural gas deposits. [ID:nL3566095]

As part of its diversification policy, Turkmenistan is also due to open a new gas pipeline to its southern neighbour Iran later this month.

Writing by Maria Golovnina; Editing by Victoria Main

Our Standards:The Thomson Reuters Trust Principles.
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