Energy flows in central Asia: Issues and outlook

The development of new hydrocarbon reservoir fields in the countries of Central Asia in 2015-2016 and the changing approaches to cooperation with the Central Asian countries in the energy sector advocated by Russia, Iran and China intensified the interest in discussing and implementing pipeline projects, which were developed in the 1990s. Given their geopolitical importance, they lead to the intensification of competition between the countries in the region and nonregional states. The new pipelines may not only create additional opportunities for the delivery of oil and natural gas from Central Asia to external markets, but also fundamentally change the balance of power in the region. This explains the increase of the role of the hydrocarbon resources in the external policy of the Central Asian countries and their closer attention to the pipeline method of transportation. In the last twenty-five years, the countries of Central Asia have made considerable progress in the establishment of a new system of pipelines. The implementation of pipeline projects in the region was closely linked to the production of hydrocarbon raw materials, since the emergence of additional volumes of oil and gas in the Central Asian countries had raised the issue of delivery to external markets. This has become a key task of foreign policy of the countries of Central Asia rich in hydrocarbon resources. As a result, the energy policy of the countries of the region have demonstrated that, despite the construction of new pipelines, which negated the monopoly of Russia’s export of hydrocarbons to external markets, the Central Asian states were unable to reduce their dependence on the policy of the neighboring states, which act as transit countries or consumers of crude oil and natural gas. Moreover, the countries of Central Asia have been closely tied to the energy interests of China, Iran and Russia, which were able to exert their influence on the states of the region by pricing mechanisms and volumes of purchases of hydrocarbon resources. The policies of the countries of Central Asia to diversify the pipeline routes have come to depend on the rates of extracting crude oil and natural gas reserves. The current situation with filling the pipelines with the required volumes of energy resources, designated for export, has demonstrated that the ability of the countries of Central Asia to significantly expand volumes of extraction of hydrocarbon resources in the shortest possible time turned out to be limited. Numerous enthusiastic projections of oil and gas production, made in the 1990s, have subsequently been lowered. As a result, a large part of the Central Asian pipelines does not operate at full capacity. On the one hand, the reasons for this were caused by the decline in production of the old oil fields, while the development of the new fields required considerable investment and the application of new technologies, which the country did not have. As a result, the lack of financial resources and equipment required a much longer time for construction of oil and gas exporting pipelines. On the other hand, the countries of Central Asia have become increasingly susceptible to geopolitical changes, fluctuations of prices in the world markets and changes in the policies of the neighboring states. Lifting sanctions on Iran and Iran’s revision of its policy in the sphere of production and export of hydrocarbons, the unstable situation in Afghanistan, the reduction of interest on the part of Russia and China in obtaining additional volumes of hydrocarbon resources—all this had influenced the energy sector of the Central Asian countries. In spite of the difficulties, the countries of the region have not abandoned the implementation of their projects for the construction of new pipelines, considering them to be additional opportunities for the export of hydrocarbon resources and the strengthening of their geopolitical positions. © 2017, CA and CC Press AB. All rights reserved.