The Kazakhstan-China pipeline (KCP)

The Kazakhstan-China pipeline (KCP) represents a major development in Kazakhstan’s pursuit of diversification of export routes in accordance with its multi-vector approach. With a pipeline operational Kazakhstan could increase their exports of oil to China from smaller amounts of about one million tons a year by rail to the far more significant 10 million tons a year from 2006 (Kandiyoti 2008b, 79).
The project started with an agreement between Kazakhstan and China on September 24 1997 regarding cooperation on oil and gas and the building of a pipeline from western Kazakhstan to the Xinjiang province in western China (China View 2006; KCP 2013). Later in 2004 China National Petroleum Corporation (CNPC) and KMG signed an agreement on the main principles of the construction of the Atasu-Alashankou pipeline39 (KCP 2013). Construction was done in phases and with CNPC having the responsibility of construction and finance the project (International Energy Agency 2010, 517-518)40. The first phase (the most western part of the pipeline) was complete in 2004, bringing oil from Aktobe and CNPC controlled fields westward to Atyrau. However, for this pipeline to be able to supply China its direction of flow needed to be reversed. The second phase from Atasu in eastern Kazakhstan to Alashankou in western China was completed in December 2005 and fully operational in 2006 (EIA 2012; KCP 2013). According to President Nazarbaev’s speech at the opening ceremony the cost of the pipeline was US $800 million (KCP 2013). From 2006 this part of the pipeline exported oil to China mainly from the Kumkol fields, in which CNPC has shares, and Russian oil via the Omsk-Pavlodar pipeline41. The third phase of the KCP connects the two first parts between Kenkiyak and Kumkol and was completed in 2009. The final pipeline can export Kazakh oil to the Chinese market and is currently being upgraded to a capacity of 20 million tons a year42, which is its designed capacity (China View 2006; KazTransOil 2013a). The refineries at Pavlodar and Shymkent in eastern Kazakhstan can potentially be supplied with oil pumped through the Kazakhstan-China pipeline.
During the development and planning of KCP there were problems with securing enough Kazakh oil for export through the pipeline to make maximize the benefit (Paik 2012, 290- 293). The solution had two parts. First, Chinese companies such as CNPC bought several Kazakh energy assets and fields during the 2000s, and then used this production to export to China. Second, Russian oil also became necessary to fill the pipeline. This was solved with an agreement of export of Russian oil signed in 2007 (Paik 2012, 293-294). The large Chinese presence in the Kazakh oil and gas projects and fields, as discussed earlier, can therefore be seen in relation with the development of the Kazakhstan-China oil pipeline.
The fact that the KCP can supply the refineries of Pavlodar and Shymkent with Kazakh oil instead of being reliant on Russian imports can potentially make Kazakhstan more independent regarding energy supply. This demands that there is enough Kazakh oil for both the refineries and export to China, which is not certain. In 2011 , Pavlodar received Kazakh oil for the first time, but is still reliant on Russian oil to operate (Tengri News 2012c).
For Kazakhstan the choice of developing this export route has both economic and political considerations. The Kazakhstan-China pipeline provides Kazakhstan with more export capacity for its oil, and simultaneously provides China with a steady supply which is important for its western region. Strictly economically speaking, it is not attractive to transport oil over 2200 km from western Kazakhstan to China because of transport costs (International Energy Agency 2010, 518; KazTransOil 2013a). That said, since China took responsibility for financing and constructing the pipeline, the costs of this export route for Kazakhstan are reduced. China is willing to invest in an expensive transport infrastructure to transport oil directly to its border, and thereby secure supply of oil. The difference between this export route and the other pipelines is that this one exports directly to China and is not a part of the world market. Since Kazakhstan through this pipeline is committed to sell oil to China, it may be in a more vulnerable position in possible future negotiations on price. From the other perspective this vulnerability is reduced by Kazakhstan’s development of multiple export routes, as long as Kazakhstan has spare capacity to shift oil away from China in the case of being offered poor terms and price. Both countries clearly have political motivations for developing this pipeline. For China a direct oil pipeline from Kazakhstan serves its energy policy and enhances its energy security by gaining direct transport over land and lessens their dependence on international seaways (Shaffer 2009, 50-51). This security of supplies is enhanced by the fact that the oil supplies for the pipeline comes from fields controlled by Chinese companies such as CNPC. For Kazakhstan a new export route directly to China helped diversify its export routes and thereby lessens dependence on Russia. Kazakhstan through this pipeline has also been part of trying to develop a mutual dependency relationship with China. In the asymmetric relationship of Kazakhstan-China relations a move toward mutual dependency of oil exports and oil supplies favor the smaller Kazakh state. Kazakhstan also has political motivations for developing the KCP regarding balancing foreign influence. By giving China a major stake in Kazakhstan’s export infrastructure, China will be more interested in the stability and future of its neighbor. For Kazakhstan the Chinese can be counterweight to the Russian interest in export through CPC and Samara pipelines. This pipeline is a key development by Kazakhstan in pursuit of the goals of the multi-vector policy. It has also contributed to moving toward a mutual dependence relationship between Kazakhstan and China.

Results (Russian) 1:

Газопровода Казахстан-Китай (ККТ) представляет собой основной развитие в Казахстане в стремлении к диверсификации экспортных маршрутов в соответствии с его многовекторный подход. С конвейера оперативной Казахстан может увеличиться их экспорта нефти Китай с меньшим количеством около одного миллиона тонн в год по железной дороге к гораздо более существенным 10 миллионов тонн в год с 2006 года (Кандийоти 2008b, 79). Проект начался с соглашение между Казахстаном и Китаем 24 сентября 1997 года в отношении сотрудничества в области нефти и газа и строительство нефтепровода из Западного Казахстана в провинции Синьцзян в западной части Китая (Китай Посмотреть 2006; ККТ 2013). Позднее в 2004 году Китайская национальная нефтяная корпорация (CNPC) и КМГ подписали соглашение об основных принципах строительства нефтепровода Атасу-Алашанькоу pipeline39 (ККТ 2013). Строительство было осуществлено поэтапно и с CNPC ответственность строительства и финансирования проекта (Международного энергетического агентства 2010, 517-518) 40. Первый этап (самой западной частью конвейера) был завершен в 2004 году, принося нефти из Актобе и CNPC контролируемых поля на запад, в Атырау. Однако для этого конвейера иметь возможность поставлять в Китай его направление потока необходимо обратить вспять. Был завершен второй этап от Атасу в Восточном Казахстане до Алашанькоу на западе Китая, в декабре 2005 года и полностью функционировать в 2006 году (ОВОС 2012; ККТ 2013). По словам президента Назарбаева речи на церемонии открытия стоимость трубопровода был 800 млн долларов США (ККТ 2013). С 2006 года эта часть конвейера экспортировала в Китай Нефть главным образом из Кумколь полей, в которых CNPC имеет акций и Российской нефти через pipeline41 Омск-Павлодар. Третий этап ККТ соединяет две первые части между Кенкияк и Кумколь и было завершено в 2009 году. Окончательный трубопровод можно экспортировать казахстанской нефти на китайский рынок и в настоящее время обновляется до 20 миллионов тонн в year42, который является ее проектную мощность (Китай Посмотреть 2006; КазТрансОйл 2013a). НПЗ в Павлодар и Шымкент в Восточном Казахстане потенциально могут поставляться с нефти, перекачиваемой через нефтепровод Казахстан-Китай. Во время разработки и планирования ККТ были проблемы с обеспечением достаточно казахской нефти на экспорт через конвейер, чтобы сделать максимальную пользу (ПЭК 2012, 290-293). Решение состоит из двух частей. Во-первых китайский компаний таких как CNPC, купил несколько Казахский энергетические активы и поля во время 2000-х, а затем это производство для экспорта в Китай. Во-вторых, Российская нефть также стала необходимой для заполнения трубопровода. Это была решена с соглашением экспорта российской нефти, подписанный в 2007 году (ПЭК 2012, 293-294). Большое китайское присутствие в казахстанской нефти и газа проекты и поля, как обсуждалось ранее, может таким образом рассматриваться в связи с развитием нефтепровода Казахстан-Китай. Тот факт, что ККТ может поставлять нефтеперерабатывающих заводов и Павлодар Шымкент с казахстанской нефти вместо полагаться на российского импорта может потенциально сделать Казахстан более независимыми относительно поставок энергии. Это требует, что есть достаточно Казахская нефть для нефтеперерабатывающих заводов и экспорта в Китай, который не является определенным. В 2011 году Павлодар получил казахстанской нефти в первый раз, но по-прежнему зависят от Российской нефти для работы (Тенгри Новости 2012 c).For Kazakhstan the choice of developing this export route has both economic and political considerations. The Kazakhstan-China pipeline provides Kazakhstan with more export capacity for its oil, and simultaneously provides China with a steady supply which is important for its western region. Strictly economically speaking, it is not attractive to transport oil over 2200 km from western Kazakhstan to China because of transport costs (International Energy Agency 2010, 518; KazTransOil 2013a). That said, since China took responsibility for financing and constructing the pipeline, the costs of this export route for Kazakhstan are reduced. China is willing to invest in an expensive transport infrastructure to transport oil directly to its border, and thereby secure supply of oil. The difference between this export route and the other pipelines is that this one exports directly to China and is not a part of the world market. Since Kazakhstan through this pipeline is committed to sell oil to China, it may be in a more vulnerable position in possible future negotiations on price. From the other perspective this vulnerability is reduced by Kazakhstan’s development of multiple export routes, as long as Kazakhstan has spare capacity to shift oil away from China in the case of being offered poor terms and price. Both countries clearly have political motivations for developing this pipeline. For China a direct oil pipeline from Kazakhstan serves its energy policy and enhances its energy security by gaining direct transport over land and lessens their dependence on international seaways (Shaffer 2009, 50-51). This security of supplies is enhanced by the fact that the oil supplies for the pipeline comes from fields controlled by Chinese companies such as CNPC. For Kazakhstan a new export route directly to China helped diversify its export routes and thereby lessens dependence on Russia. Kazakhstan through this pipeline has also been part of trying to develop a mutual dependency relationship with China. In the asymmetric relationship of Kazakhstan-China relations a move toward mutual dependency of oil exports and oil supplies favor the smaller Kazakh state. Kazakhstan also has political motivations for developing the KCP regarding balancing foreign influence. By giving China a major stake in Kazakhstan’s export infrastructure, China will be more interested in the stability and future of its neighbor. For Kazakhstan the Chinese can be counterweight to the Russian interest in export through CPC and Samara pipelines. This pipeline is a key development by Kazakhstan in pursuit of the goals of the multi-vector policy. It has also contributed to moving toward a mutual dependence relationship between Kazakhstan and China.

Results (Russian) 3:

Отрасли Казахстана (KCP) представляет собой одну из крупнейших в Казахстане стремление к диверсификации экспортных маршрутов в соответствии с ее многовекторный подход. С нефтепровода Казахстан может увеличить экспорт нефти в Китай из меньшего количества около одного миллиона тонн нефти в год по железной дороге на гораздо более значительные 10 млн. тонн в год, начиная с 2006 г.) (Kandiyoti 2008 г.b,