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China Striving to Boost Energy Imports from Turkmenistan

China is expected to be a major presence at the 28th meeting of the Energy Charter Conference, scheduled to be held in the Turkmen capital Ashgabat on November 28-29. Chinese officials are looking to catalyze efforts to secure larger volumes of energy imports from Central Asian suppliers, especially Turkmenistan, and promote projects connected to the $1-trillion Belt and Road infrastructure development initiative.

The Energy Charter Treaty dates back to 1991 and was designed to provide a clear framework for all facets of cross-border energy development in Eurasia in the post-Soviet era, including investment and transit. Members are primarily European and post-Soviet states. China gained observer status in 2001.

Although Chinese economic growth has slowed, the country’s demand for energy remains strong. Oil consumption grew 3.3 percent in 2016, following average annual growth rates of 5.7 percent from 2005-2015, according to BP. Gas consumption rose at a 7.7 percent rate in 2016, down significantly from an average annual growth rate of about 15 percent from 2005-2015.

According to the International Energy Agency, China’s demand for gas is forecast to rise by 8.7 percent per year to 2022. China’s own energy reserves are insignificant, thus it needs to expand access to international suppliers. At the same time, Beijing is focusing on ramping up overland supplies in order to reduce its dependency on tanker-borne imports that pass through the Strait of Malacca, a maritime chokepoint that could be easily closed off in a time of potential conflict.

Chinese attention is naturally focusing on expanding natural gas supplies from Turkmenistan. Ashgabat reportedly controls the world’s fourth largest reserves of gas, and shipped roughly 30 billion cubic meters (bcm) of it to China in 2016. (Given the closed nature of Turkmenistan’s political system, no definitive figures are publicly available).

According to the June 2017 BP Statistical Review of World Energy, China imported about 38 bcm of gas from various countries via pipeline in 2016, while another 34.3 bcm of liquefied natural gas (LNG) also was imported. Of the natural gas imported via pipeline, Turkmenistan accounted for about 77 percent of China’s total imports in 2016 via the 3,666-kilometer (2,278-mile) Central Asia-China gas pipeline network. With exports to Iran and Russia having shriveled, China is now Ashgabat’s sole significant purchaser of gas, which is the critical source of revenue for President Gurbanguly Berdymukhamedov’s authoritarian regime.

China has already invested billions of dollars in trying to develop Turkmen gas fields. In 2009, Turkmenistan received an initial $3 billion loan from the Chinese Development Bank (CDB) for developing the Galkynysh (also known as the South Yolotan-Osman) gas field, and, two years later, obtained an additional $4.1 billion tranche.

Meanwhile, a consortium headed by the China National Petroleum Corp. (CNPC) gained a $10-billion production sharing agreement (PSA) for Galkynysh field in 2009, and CNPC also holds the PSA for Bagtyyarlyk, which covers several gas fields, including Saman-Depe and Altyn Asr.

Under the Galkynysh PSA, Turkmenistan is supposed to export 30 bcm per year to China for 30 years. But the two countries want to bring annual gas deliveries up to 65 bcm per annum — 30 bcm from Galkynysh, and the rest from the Bagtyyarlyk PSA and other Turkmen sources.

The major challenge to realizing this goal is Turkmenistan’s evident lack of sufficient export capacity. The existing export pipeline network to China is operating near capacity and a major expansion is on hold. Turkmenistan’s economy is also coming under great strain, due to a significant drop in export income brought on flat energy prices. Chinese officials are hoping the late November gathering in Ashgabat can help break the apparent log-jam on pipeline construction.

Chinese officials also will look for opportunities during the Ashgabat meeting to tout the Belt and Road initiative, which is envisioned as a means to expand Chinese exports to Europe and Eurasian states.

Chinese trade with Central Asian states these days tends to be a one-way street, with raw materials and natural resources flowing to China, and few high-value goods coming back in return. For example, Turkmenistan’s imports of Chinese goods accounts for about $815 million out of China’s total world exports of $2.3 trillion, or under 0.04 percent.

Chinese financial institutions are expected to support Chinese companies in expanding Turkmenistan’s rail infrastructure. A new railway connecting Kazakhstan, Turkmenistan and Iran opened last year, with the first trains making the 14-day journey from coastal Zhejiang Province in China to Tehran in February 2016. In addition, the China Railway Corporation (CRC) has proposed a 3,200-kilometer (nearly 2,000 mile) Silk Road high-speed railway connecting the western city of Urumqi in China with Kazakhstan, Uzbekistan, Kyrgyzstan, Turkmenistan and terminating in Tehran.

Trade is also expected to improve for China after the completion of the $2-billion, 635-kilometer Turkmenistan-Afghanistan-Tajikistan (TAT) railway. Turkmenistan completed its section of the railway with Afghanistan in November 2016.

Editor’s note: Gary Sands is a Senior Analyst at Wikistrat, a crowdsourced consultancy, and a Director at Highway West Capital Advisors, a venture capital, project finance and political risk advisory. He has contributed commentaries to US News and World Report, Newsweek, Washington Times, The Diplomat, The National Interest, International Policy Digest, Asia Times, Eurasia Review, Indo-Pacific Review, the South China Morning Post, Global Times and China Digital Times.

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Afghanistan

Afghanistan to build first Women’s Police Town

KABUL: To encourage more women to join the police force in this deeply conservative and male-dominated society, Afghanistan has launched a housing project for female officers.
Women’s Police Town was inaugurated on Monday in Kabul and is funded by international donors, with Canada providing $26 million for its first phase.
It includes construction of 10 apartment buildings, each with 30 units and able to house 300 policewomen and their families in Kabul, the US-led coalition and Afghan officials said.
“This is the first such project for female police in the history of Afghanistan,” Interior Ministry spokesman Najib Danesh told Arab News on Tuesday.
“It will be expanded to other parts of the country in later stages. The purpose is to encourage women to join the police ranks.” The project is due to be completed by 2020.
The proposed complex will be constructed in four phases, and will include an elementary school, child day-care facility, medical clinic, fitness center and community center, officials said. The government will manage and operate the school and day-care facility, they added.

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Afghanistan

Wounded Taliban undergo for treatment inTajikistan,claims Afghan MP

KABUL:Afghan MP claims that wounded Taliban militants are undergoing medical treatment in hospitals in Tajikistan.

According to VOA, member of Loya Jirga from Kunduz province, Eng. Kamal Sapai, said on Wednesday that Taliban militants who have been wounded in clashes with government forces in Kunduz province are undergoing medical treatment in hospitals in Tajikistan.

Meanwhile, the Tajik authorities deny this statement as absolutely ‘unfounded’.

“Information spread by Afghan parliamentarian through the Ashna TV is an egregious lie,” Muhammad Ulughkhojayev, a spokesman for the main Border Guard Directorate at the State Committee for National Security (SCNS) of Tajikistan, told media in an interview .

“The Taliban Movement is designated as a terrorist organization and any contacts with it are banned by Tajikistan’s legislation,” said Ulughkhojayev.  “Official Dushanbe has never had any contacts with Taliban and that’s the end of it.”

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Afghanistan

Senior Cleric Says Iran ‘Fully Determined’ To Boost Missile Power

Tehran interim Friday Prayer Leader Ayatolllah Seyyed Ahmad Khatami said the Islamic Republic of Iran is fully determined to upgrade its missile power aimed at “confronting whatever threat posed by Israel”, IRNA reports.

Addressing the worshipers at Tehran University, Ayatollah Khatami said “in a world where wolves rule and there is no logic in their behavior, the Islamic Republic should be armed and powerful”.

The senior cleric said Iran’s military missile might is one of the main components of the country’s policy of deterrence.

“We have missiles, we would continue building more missiles and increase their ranges”, he added.

The senior cleric further said that the most important principle of Iran’s military power is defense through deterrence.

Ayatollah Khatami said Iran would never make atomic bombs, adding that based on a Fatwa issued by Supreme Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei, Iran remains to believe that it should not develop and possess nuclear weapons.

 

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