China, Kazakhstan to Build Pipelines

China, Kazakhstan to Build Pipelines From Caspian Sea
By Henry Meyer
Aug. 18 (Bloomberg)

The leaders of China and Kazakhstan agreed to finance and build a network of pipelines to supply the world's fastest-growing major economy with oil and gas from the Caspian Sea region.

``The Caspian will be linked to western China,'' Kazakh President Nursultan Nazarbayev told reporters in the capital Astana today after meeting with his Chinese counterpart Hu Jintao. ``These are major projects and today we reached agreement on these issues.''

Kazakhstan's Atasu-Alashankou oil route will be extended and a gas link from Turkmenistan to China through Kazakhstan will be built, Nazarbayev said. The gas link will bypass Afghanistan, Tajikistan and Kyrgyzstan, landlocked countries between Turkmenistan's Caspian shore and China.

China, the world's second-largest energy user, is scouring the globe in search of energy supplies for its economy, which is expanding at an annual rate of 11.9 percent, the fastest pace in more than a dozen years. Kazakhstan and Turkmenistan are the biggest energy suppliers in the former Soviet Union after Russia. The Caspian region they share with Azerbaijan, Iran and Russia holds about 4 percent of the world's proven oil and gas reserves.

The gas pipeline will be able to move 30 billion cubic meters of fuel a year and cost as much as $4 billion to build, Energy Minister Baktykozha Izmukhambetov said in November.

Chinese Investment

The 750-kilometer (1,200-mile) extension of the Atasu- Alashankou oil pipeline will connect China with two oil fields, Kenkiyak and Kumkol, owned and operated by Kazakh units of state- run China National Petroleum Corp. The pipeline will have a capacity of 400,000 barrels a day, or about 5 percent of China's consumption.

China National Petroleum Corp., the biggest Chinese oil producer, said yesterday it will expand oil and gas co-operation with Kazakhstan after spending more than $6.5 billion so far on oil exploration, refining and pipelines in the country.

Nazarbayev, 67, met the Chinese leader as Kazakhstan held parliamentary elections that are expected to cement his 18-year rule. Hu praised Nazarbayev for his ``democratization'' of the former Soviet republic.