With the old, wise Dick Cheney of “Halliburton fame” visiting Kazakhstan earlier the week, eyes remained focussed on Kazakhstan — and indeed the entire Central Asia — “the last frontier of energy.” Kazakhstan is already producing one million barrels of oil a day and according to analysts it has the capacity to increase its output to almost three million barrels a day by 2015.
Kazakhstan is also rich in gas. However, due to its geography and a host of other reasons including the lack of proper infrastructure, the energy potential of Kazakhstan and other Caspian states have been underutilized — to say the least.
“Kazakhstan with her substantial petroleum resources has emerged as an increasingly interesting supplier as global energy demand increases in the years ahead. Bordering to China, Kazakhstan has an interesting energy hungry market to the east, bordering on the Caspian also interesting energy hungry markets to the West, and not to forget the Asian subcontinent to the south. Centrally placed, geographically, they have several options to consider in policies to ensure the long-term demand security that they will be looking before developing (investing) and expanding their production capacity,” argued Ambassador Arne Walther, secretary general of International Energy Forum while commenting on the issue.
With apprehensions all around that oil and gas, the fuelling the growth of this hydro-carbon driven civilization, may not be available in plenty and cheap for long as they are today, the race to secure the energy needs by the energy hungry countries is heating up, all around.
And thus when the US Vice President Dick Cheney landed in Astana last Friday, he was there with a candid mission — to persuade President Nursultan Nazarbayev to opt for the Azerbaijan-Georgia-Ceyhan pipeline, to take its products to West — the major energy market. Since this pipeline bypasses Russia, it would also be free from the stranglehold of Moscow, they argued.
Just preceding this visit, the EU energy commissioner Andris Piebalgs also went to Astana, with almost the same objective. And for the time being Kazakhs appear to be warming up to the idea of using the Azerbaijan-Georgia-Ceyhan pipeline that the West has been trying to sell hard to them, all these weeks.
Choosing export routes is a big issue for Kazakhstan, which currently has few options but to sell much of its output cheaply via Russian gas monopoly Gazprom.
Kazakhstan has traditionally been a close political ally of Russia. However, with a new oil minister of Kazakh origin replacing the previous Russian origin oil minister in Astana and indeed with the obvious nudging from the West, Kazakhstan has recently been seen looking around, seeking to diversify its export routes. It has already built an oil pipeline serving China and the first oil from this pipeline finally reached energy hungry China last week.
Kazakhstan’s role as a potential global gas supplier however, was highlighted in January when a tariff squabble between Russia and Ukraine cut gas supplies briefly to parts of Europe, sparking a debate in Europe over the need to develop alternative sources.
Turkmenistan and Uzbekistan are Central Asia’s biggest gas exporters. Kazakhstan has so far exported very little gas partly due to a lack of export infrastructure. Nazarbayev’s government however, appear to be keeping an eye on its energy riches and to exploit its gas reserves at a time, when energy prices are scaling new heights.
In 2001, the United States and Kazakhstan signed Energy partnership, ensuring governmental cooperation in areas such as energy security, oil and gas, electric power development and nuclear and environmental protection.
US energy interests are extensive in Kazakhstan. Its Tengiz oil field, holding some 6-9 billion barrels of oil, is currently being developed by oil majors including ExxonMobil and Chevorn & Irving. The US giant Halliburton is also active in the field providing field related services to the drilling companies.
A new great game, to increase the influence and access the energy resources of Central Asian states definitely seems to have begun. With oil and gas export routes now established from Azerbaijan that exclude Russia, the US is shifting its focus to trying to offset Russian dominance over exports from Kazakhstan. Skirting Russian controlled pipelines would “break Russia’s stranglehold” on the export of Kazakhstan’s oil, says Frederick Starr, director of John Hopkin University’s Central Asia Caucasus Institute in Washington. It would also add to the West’s sense of security, analysts concede.
This is the second US attempt to bring central Asian gas into Europe. Lengthy negotiations over a scheme to pipe gas from Turkmenistan across the Caspian to Azerbaijan broke down in the 1990s mainly because Saparmurat Niyazov, the Turkmen leader, kept changing the terms, western analysts accuse. Among the Central Asian states Turkmenistan has the biggest gas reserves, though many in west now term it as “a lost cause”. With Dick Cheney undertaking a tour of Kazakhstan to discuss energy issues and White House courting Ilham Aoliyev of Azerbaijan a week earlier, the US government appears to be stepping up its drive to secure energy supplies from Central Asia in a bid to counter Russian Gazprom’s growing clout and thwart a mounting challenge from China, as analysts signal the start of a tense new Great Game.
Competitions for dominance over Central Asian energy resources seem to be burning, in its wake, the Russian — West Bridge of the post cold war era — an energy casualty, one could safely argue!
