Reuters A worker walks on oil pipes at a refinery in Suining, Sichuan province October 22, 2009.

Oil's Well in Central Asia

China, Kazakhstan, and Russia Make a Deal

For 13 years, the shadows of NATO supply planes have flecked Central Asia. As the war in Afghanistan stretched on, troops, equipment, and fuel passed through or over Central Asian territories on a daily basis. The drawdown of NATO’s fighting capacity last January should have brightened the skies. But, as it turned out, there were worse storms brewing over the horizon.

As NATO, a guarantor of stability, retreats west, Central Asian states have become increasingly vulnerable to external and internal pressures. China and Russia see this as an opportunity to play chess in a sophisticated game to win influence in the region. The maneuvering between them will likely play itself out over oil and gas resources and export routes, particularly through the region’s largest hydrocarbon producer, Kazakhstan. Prolonged Western sanctions against Russia and sustained low oil prices will only serve to complicate matters.

CRUDE ALLIANCE

Before oil prices started falling and Russia was hit with waves of international sanctions, Russian President Vladimir Putin started to build alliances with international oil companies, believing that he was solidifying Russia’s position in global energy markets and other resource-rich regions, especially in Central Asia. In August 2011, the Russian national oil champion Rosneft reached a strategic partnership deal with ExxonMobil. Overnight, the world’s largest private oil company, ExxonMobil, whose involvement in Caspian oil production and transportation had previously mostly annoyed Moscow, emerged as Russia’s potential long-term ally in the region. Then, in November 2013, Rosneft reached an oil swap deal with Kazakhstan’s national oil company, KazMunaiGaz, to supply Caspian oil to China as part of Russia’s energy commitments to Beijing.

A worker walks past pump jacks at UdmurtNeft's Gremikhinskoye oil field east of Izhevsk near the Ural Mountains, December 7, 2007.

A worker walks past pump jacks at UdmurtNeft's Gremikhinskoye oil field east of Izhevsk near the Ural Mountains, December 7, 2007.

As a result of these deals, Russia’s dream of using a Kazakhstan–China oil pipeline as a way of locking Kazakhstan into Moscow’s energy relations with Beijing looked set to become real. Old divisions between international oil companies

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