Any strategic analyst sitting in Beijing would largely be worried about China's strategic vulnerability as he focussed on the sea route passing through the Straits of Malacca. Nearly 80% of China's oil imports pass through this route. China relies heavily on oil, gas and other natural resource commodities to feed its growing economy and these are mainly transported by sea. It is expected that China's imports of crude oil may exceed 300m tons by 2012 and today China is the world's second largest importer of oil after the US and it has even overtaken Japan.
In 2004 a Chinese newspaper stated that 'it is no exaggeration to say that whosoever controls the Straits of Malacca will have a stranglehold on the energy route to China'. The Malacca Straits at its narrowest are only three to four kilometres wide and are one of the busiest waterways in the world as it connects the Indian Ocean and the South China Sea. More than 60,000 merchant vessels transit through the Straits each year with giant oil tankers carrying crude oil from West Asia to the burgeoning economies of China, South Korea and Japan being the more prominent. In case the Straits of Malacca were ever to be blockaded, it would mean a detour of at least three to four days extra steaming by ships and that also not through very safe waters. Hard headed realists that the Chinese are they are sceptical of the attitude of the US and India, the two countries with sufficient Naval fire power to cause acute embarrassment to China bound shipping, in case it becomes necessary. It is for this reason that China watches each joint exercise between the US and Indian navies with great care and if the Japanese Navy were to join in, Chinese paranoia becomes even that much more acute.
The Chinese have already started to take effective counter-measures to obviate such a necessity. Firstly the Chinese have already enhanced the capacity of their strategic reserve and the location and exact quantities are considered a state secret. Secondly the Chinese have moved smartly to tie up additional quantities of crude from countries such as Venezuela so that tankers carrying crude oil for China would not have to cross the Malacca Straits. In addition China has recently advanced as loan a sum of US $ 20billion enhancing the existing line of credit to Venezuela to finance new power plants and infrastructure construction projects in return for long term oil supply commitments. Thirdly and most important of all are the new pipe-lines that China is building right across the Central Euro-Asian heartland-the new silk route!
As a first step China moved rapidly to conclude boundary disputes lingering from the Soviet era with the former Soviet Republics of Kyrgyzstan, Uzbekistan and Kazakhstan. With a boundary settlement also successfully negotiated with Russia and Mongolia, China's entire border line with the Former Soviet Union and Mongolia stood settled and free from incidents and consequent tension in relations. The political and boundary settlements thus arrived at made it possible for China to negotiate far reaching economic and commercial deals with these newly independent, but resource rich nations of Central Asia.
As China was in need of vast amounts of energy for its booming economy, it was but natural that sooner rather than later crude oil and gas supply arrangements would be negotiated. Negotiations began first with Kazakhstan and by 2004 construction of a 620mile long oil pipe line costing about US $700 m began which would join Atasu in Kazakhstan with Alashankou in Xinjiang [Sinkiang]. Construction was completed by December 2005. This pipeline can carry 200,000 b/d of crude oil and it is expected that its capacity would be further enhanced to nearly double its present capacity by 2012.
Similarly China moved to tap the vast natural gas resources located in Turkmenistan. It is estimated that Turkmenistan holds the 5th largest reserves of gas in the world. By 2009 negotiations were complete for an 1140 kilometre long gas pipeline that would carry 30bcm of gas from Turkmenistan through Uzbekistan and southern Kazakhstan to the Chinese town of Horgos. From here it would link up with the existing Chinese pipeline system. Thus both crude and gas from Central Asia would soon be fuelling the engines of the Chinese economy and its growth centres situated along its Pacific coastline.
But by far the most important development has been the construction of the Russian Eastern Siberian-Pacific [ESPO] pipeline which commenced on 27th April 2009. This became possible as a result of an agreement between Russia and China under which China would offer Russian firms long term credit amounting to US$ 25 b in return for which Russia would supply 300mt of oil through this pipeline for the period 2011 to 2030.This pipeline which begins its journey from the Russian city of Taishet reaches the Russian Pacific coastline some 2500 miles away and is capable of supplying crude both to China and the other Pacific Ocean countries such as Japan and South Korea. The Russians have built a new oil terminal port at Kozmino on the Pacific coastline. At a point near Skovorodino, inside the Russian Far East, this pipeline is barely 30 miles away from the Chinese border and a branch is being built to supply crude oil to China directly. The capacity of the pipeline is estimated at 600,000b/d. Thus Russia can supply Siberian crude independently to China as well as to Japan and South Korea without any political implications.
With the commissioning of these new pipelines, strategic analysts in China can breathe a sigh of relief. As these pipelines are beyond the reach of any credible military threat, China need not worry about its economic life-line being choked at the Malacca Straits. This will also mean that China will have a freer hand to manoeuvre, should it wish to do a power projection abroad, particularly in the South China Sea area. India too will also have to be very watchful.
For Russia this is a new beginning. Hugely dependent for its economic well being on its oil and gas exports, Russia could only send its energy exports westwards, since all its pipelines were designed for exports to the west. While it could negotiate with the west for its exports, Russia was always at a disadvantage for it could not sell to any other region. The west, on the other hand, could always look at alternative supplies from the Middle-East, just in case Russia baulked or was not price competitive. With the opening of the new pipeline [ESPO] new opportunities for Russia have opened up. If the west declines to lift Russian oil and gas exports for whatever reason, Russia can easily switch supplies to the east through this new pipeline. For Russia this is of great strategic significance, both economic and political.
Thus as these new pipelines snake through the Euro-Asian heartland, they are essentially following the old silk route to China. In the past it was the fabled wealth of Cathay [China] that attracted inveterate travellers such as Marco Polo from Europe. What goods Marco Polo brought back to Europe and the stories of fabulous wealth, some imagined some true that he disseminated, fired the imagination of Europeans to seek the wealth of Asia through the sea route to the Indies and to China. The overland route was thought to be too risky and too dangerous and rather long for any trade to prosper. Today the tables have been turned. It is the fabled wealth of the Central Euro-Asian heartland that is attracting outsiders. Both the US and Russia and now China are competing for the natural resources of this region and how this eventually pans out will determine the future fortunes of these countries!
Views are those of the author
* The author is a former Secretary, Ministry of External Affairs, Government of India.