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China, Russia and the Tussle for Influence in Kazakhstan

China, Russia and the Tussle for Influence in KazakhstanUntil recently, Central Asia played only a modest role in world politics, a reflection of its economic weakness, domestic problems, and distrust of integration. Russia’s presence in the region as the primary political mediator and economic partner was incontestable. In the last few years, though, China’s growing economic interest in Central Asia has come to be seen in Moscow as a threat to its influence. Russia is watching closely the Silk Road Economic Belt initiative, which would give Beijing the dominant role and could supplant the Eurasian Economic Union. With Kazakhstan the core state in any integration project in the region, it looks set to become the frontlines of the tussle between China and Russia for regional influence.

Russian Interests

Driving Russian policy in Kazakhstan are the activities of four major Russian energy companies: Gazprom, Lukoil, Transneft and Rosneft. These companies allow Moscow to keep Astana within the sphere of Russian interests and help prevent Beijing from dominating Kazakhstan’s economy. Their participation in local energy projects gives Russia access to oil and gas reserves, while binding the two countries in the energy, transport, space and agriculture sectors.

The basis of the partnership rests on agreements covering petroleum contracts and energy supplies transiting through Kazakhstani and Russian territory to European or Chinese markets. Currently, the leading Russian investor in Kazakhstan is Lukoil, which operates seven projects and has a stake in the cross-country pipeline Caspian Pipeline Consortium (CPC). In 2013, 32.7 million tons of oil was pumped through the pipeline, 28.7 million tons of it exported from Kazakhstan.

Since January 1, 2014, Rosneft has been able to transport 7 million tons of oil each year via the Priirtyshsk-Atasu-Alashankou route under an intergovernmental agreement on sending Russian oil to China via Kazakhstan, which was inked at a meeting of the Supreme Eurasian Economic Council on December 24, 2013. Russian authorities have stated that the transported amount can be increased to 10 million tons. This will allow Moscow to expand long-term economic cooperation with Astana and guarantee the latter additional budget revenues of 54.6 million dollars as a transit charge. Moreover, the agreement extended the Atasu-Alashankou pipeline capacity from 12 to 20 million tons of oil per year.

The third important pipeline of Russia and Kazakhstan is the Atyrau-Samara route, which transfers Kazakh oil to Russia and then on to Europe. In 2013, 15.4 million tons of oil was transported via this route.

Finally, Russian and Kazakhstan use a maritime route in the Caspian Sea between Aktau and Makhachkala to deliver 2.7 million tons of oil.

This stable energy partnership is also evident in the gas sector. Two crucial gas pipelines – Central Asia-Center and Bukhara-Ural – that run through Kazakhstan territory let Gazprom expand its resource portfolio and guarantee an uninterrupted gas supply abroad. Gazprom’s ambitions also encompass field development and joint ventures. Thus, KazMunayGaz and Gazprom established LLP KazRosGas with a 50/50 stake in 2002 to consolidate efforts across a number of new projects.

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